Jumping without parachutes. Revolving doors and political in centives
Abstract:
W e explore the impact of connections between politics and business on the pr ofile of political candidates and on their policy decisions. Specifically, we examine the effects of anti-revolving door laws, which enforce a waiting period (``cooling-off'') before former politicians can hold significant ro les in the bureaucracy or in state-owned enterprises. We build a political agency model with endogenous selection into politics where those ``politica lly connected outside options'' (PCOs) are available to politicians. We sho w that a reduction in their expected value is relatively more costly for ca ndidates with a lower human capital, thus it increases the share of high hu man capital candidates. At the same time, it increases the likelihood of eq uilibria where low human capital politicians choose to pander toward the vo ters' prior. Empirically, we test those predictions using Italian municipal ity-level data. We exploit a population threshold in the application of an anti-revolving door policy that introduces a cooling-off period. Using a di fference-in-discontinuity approach, we show that the cooling-off period inc reases the average education of candidates and elected mayors. We also show that the reform reduces the incentives to choose policies that may be elec torally costly, but only for low human capital mayors.
DTSTAMP:20260408T151819Z DTSTART:20240314T143000Z DTEND:20240314T160000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR