Public Employees as Politicians: Evidence from Close Elections

VATT Institute for Economic Research Working Papers No. 78

73 Pages Posted: 29 Sep 2016

See all articles by Ari Hyytinen

Ari Hyytinen

University of Jyväskylä

Jaakko Meriläinen

Stockholm University, Students

Tuukka Saarimaa

Aalto University - School of Business; Aalto University - School of Engineering

Otto Toivanen

Aalto University - Department of Economics; KU Leuven - Faculty of Business and Economics (FBE); CEPR; Helsinki Center of Economic Research (HECER)

Janne Tukiainen

VATT Institute for Economic Research; University of Turku - Turku School of Business - Department of Economics

Date Written: September 27, 2016

Abstract

We analyze the effect of municipal employees’ political representation in municipal councils on local public spending. To quantify the effect, we use within-party, as-good-as random variation in close elections in the Finnish open-list proportional election system. One more councilor employed by the public sector increases spending by about one percent. The effect comes largely through the largest party and is specific to the employment sector of the municipal employees. The results are consistent with public employees having an information advantage over other politicians, and thus, being able to influence policy.

Keywords: close elections, political representation, public employees, public expenditures

JEL Classification: C26, D72, H72, H75

Suggested Citation

Hyytinen, Ari and Meriläinen, Jaakko and Saarimaa, Tuukka and Toivanen, Otto and Tukiainen, Janne, Public Employees as Politicians: Evidence from Close Elections (September 27, 2016). VATT Institute for Economic Research Working Papers No. 78. Available at SSRN: https://ssrn.com/abstract=2844701 or http://dx.doi.org/10.2139/ssrn.2844701

Ari Hyytinen

University of Jyväskylä ( email )

PO Box 35
Jyväskylä, 40014
Finland

HOME PAGE: http://www.jyu.fi

Jaakko Meriläinen

Stockholm University, Students ( email )

Stockholm
Sweden

Tuukka Saarimaa

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

Aalto University - School of Engineering ( email )

PO BOX 14100
Aalto 00076
Finland

Otto Toivanen

Aalto University - Department of Economics ( email )

PO Box 1210
FI-00101 Helsinki
Finland

KU Leuven - Faculty of Business and Economics (FBE) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

CEPR ( email )

London
United Kingdom

Helsinki Center of Economic Research (HECER)

FI-00014 Helsinki
Finland

Janne Tukiainen (Contact Author)

VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00101
Finland

University of Turku - Turku School of Business - Department of Economics ( email )

Rehtorinpellonkatu 3
Turku, 20014
Finland

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