Pay for politicians and campaign spending: evidence from the French municipal elections

Abstract

This paper studies the relationship between politicians’ pay and the campaign spending of candidates running in the French municipal elections. For that purpose, I construct a dataset containing the campaign records of all lists running in the 2008 and 2014 elections in municipalities of more than 9000 inhabitants. I implement a regression discontinuity design exploiting a population threshold in elected officials’ pay. The results show that, around the 20,000-inhabitant threshold, the pay level negatively impacts candidates’ spending. That puzzling result is not only statistically significant, but also economically sizeable: the amounts spent by lists running in municipalities just above the threshold are up to 35% less than those of lists running just below the population threshold. The result combines with an important reduction in the intensity of political competition, favoring an incumbent’s reelection. I also provide some evidence of a decline in mayoral quality. The results suggest that politicians’ pay does shape their incentives, but higher pay can favor the persistence of low-quality mayors.