Public employees as politicians

What is it about?

We study how public employees as politicians shape the economic outcomes in the context of Finnish local governments. Our findings suggest that 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.

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Why is it important?

Public employees are a large group that share an interest in sustaining public employment and that can influence politics in various ways: as voters, through public sector unions and as politicians. The dual role of public sector employees as policy-makers has raised the concern that, when elected, they may be in a better position to extract rents from holding the office than otherwise similar politicians. Consistent with such concerns, many countries have restricted the political participation of public employees. However, so far there has been only little evidence on whether public employees would act differently from the other politicians when elected.