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Public Employees as Politicians: Evidence from Close Elections



We analyze the effect of municipal employees’ political representation in municipal councils on local public spending. We use within-party, as-good-as-random variation in close elections in the Finnish open-list proportional election system to quantify the effect. One more councilor employed by the public sector increases spending by about 1%. The effect comes largely through the largest party and is specific to the employment sector of the municipal employee. The results are consistent with public employees having an information advantage over other politicians, and thus, being able to influence policy.


Corresponding author

Ari Hyytinen is a Professor, University of Jyväskylä, School of Business and Economics (JSBE), P.O. Box 35, 40014 University of Jyväskylä, Finland (
Jaakko Meriläinen is a PhD Candidate, Institute for International Economic Studies, Stockholm University, IIES, Stockholm University, SE-10691, Stockholm, Sweden (
Tuukka Saarimaa is a Senior Researcher, VATT Institute for Economic Research, Arkadiankatu 7, Helsinki, FI-00101 (
Otto Toivanen is a Professor, Department of Economics, Aalto University School of Business and a Professor, Department of Managerial Economics, University of Leuven, Arkadiankatu 7, 00100 Helsinki, Finland; Naamsestraat 69, B-3000 Leuven, Belgium (
Janne Tukiainen (corresponding author) is a Visiting Associate Professor, Department of Government, London School of Economics and Political Science; and Senior Researcher, VATT Institute for Economic Research, Houghton Street, London WC2A 2AE, United Kingdom; Arkadiankatu 7, Helsinki, FI-00101, Finland (


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We thank Manuel Bagues, Thushyanthan Baskaran, Matz Dahlberg, Dominik Hangartner, Robert Inman, Tatiana Komarova, Benjamin Lauderdale, Eva Mörk, Oskar Nordström Skans, Torsten Persson, Heikki Pursiainen, Marko Terviö, and Guy Whitten for helpful comments. Seminar audiences at AEA San Francisco, BI Oslo, FEEAM Pori, EPSA Vienna, HECER Helsinki, IIES, IIPF Dublin, Uppsala and VATT Helsinki provided great feedback. We are also grateful to three anonymous reviewers and the editor, Ingo Rohlfing, for their thoughtful comments on the manuscript. Financial support from the Emil Aaltonen Foundation is gratefully acknowledged.



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Public Employees as Politicians: Evidence from Close Elections



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