Monday, 21 May 2012

Private returns to public office

A new interesting NBER working paper on Private Returns to Public Office by Raymond Fisman, Florian Schulz and Vikrant Vig is available. The abstract reads:
We study the wealth accumulation of Indian parliamentarians using public disclosures required of all candidates since 2003. Annual asset growth of winners is on average 3 to 6 percentage points higher than runners-up. By performing a within-constituency comparison where both runner-up and winner run in consecutive elections, and by looking at the subsample of very close elections, we rule out a range of alternative explanations for differential earnings of politicians and a relevant control group. The ``winner's premium" comes from parliamentarians holding positions in the Council of Ministers, with asset returns 13 to 29 percentage points higher than non-winners. The benefit of winning is also concentrated among incumbents, because of low asset growth for incumbent non-winners.
This is the type of study you would like to see repeated for many other countries. Just how big is the premium for New Zealand?

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