Choosing not to lead: political selection and monetary incentives in local parliamentary systems

Using a rich database covering all local politicians in Italian municipalities, we implement a regression- discontinuity analysis to evaluate the causal effect of monetary incentives on political selection in local parliamentary systems. We find that higher (expected) wages result in more educated council members and more educated executives, but not more educated mayors. While low-wage councils tend to elect mayors who have almost two years of schooling more than the median councillor, this difference vanishes in high-wage councils. We rationalize this finding in a model where better educated councillors shy away from better-paid but full-time positions (such as mayor) and prefer less-paid but part-time positions (executives) which allow them to devote more time to work while in office. An analysis by politicians’ occupation provide support to this explanation. Our results thus highlight that the effects of monetary incentives are not invariant across different institutional settings, especially when election systems include a parliamentary stage.