The long run earnings effects of winning a mayoral election

We combine administrative data on private-sector earnings with data on Italian municipal elections from 1993 to 2017 to estimate the causal impact of winning a mayoral election on long-term earnings. Exploiting close contests in candidates’ first mayoral elections, we credibly identify the causal impact of an initial electoral victory on subsequent labor market and political earnings. We find that, over 15 years, winning an election increases the average discounted value of earnings by 6.5 %, a modest return compared to other career options. This positive effect stems mainly from higher political compensations during the first electoral term but is short-lived due to runners-up succeeding in later elections and a two-term limit. While in office, winners face negative impacts on labor and social security earnings, which persist post-mandate especially in Southern Italy, due to challenges in resuming work. We find little support for illegal labor market engagement, and that the negative effects on labor earnings are larger for low-educated, low-earning, and female candidates, contributing to their underrepresentation in politics.