Opportunity Costs and Outside Careers in U.S. State Legislatures

Abstract

Cost‐benefit models of career choice predict that potential legislators choose legislative careers when they expect greater utility from legislative service than from other options. In state legislatures, the utility of legislative service includes the monetary value of outside careers. I hypothesize that legislators are more likely to pursue outside careers when financial opportunity costs are higher or when they derive less non‐monetary value from legislative service. In particular, I posit that individual characteristics that predict labor market value (such as age, education, race, and sex) and legislative salary predict outside careers. I test this model employing a new dataset of individual outside‐career activity derived from financial disclosure reports. The findings strongly support the hypothesis that outside‐career behavior is a function of the financial opportunity costs of legislative service. In addition, I find that Republicans are more likely to hold outside careers than are Democrats. This research has important implications for the study of state legislative participation, legislative organization, and the Democratic bias hypothesis.