Politiciansoutside earnings and electoral competition

This paper deals with the impact of electoral competition on politiciansoutside earnings. We propose a simple theoretical model with politicians facing a tradeo ¤ between allocating their time to political e¤ort or to an alternative use generating outside earnings. The model has a testable implication stating that the amount of time spent on outside work is negatively related to the degree of electoral competition. We test this implication using a new dataset on outside earnings of members of the German federal assembly. Taking into account the potential endogeneity of measures of political competition that depend on past election outcomes, we \u85nd that politicians facing low competition have substantially higher outside earnings. JEL Classi\u85cation: D72, J4