The lure of the private sector: career prospects affect selection out of Congress

Abstract

Does the potential for a successful private sector career induce legislators to leave office? How does this affect the representation voters receive? I show that when former US senators—who now work as lobbyists—become more successful, currently serving senators with similar characteristics are more likely to take private sector employment. I replicate all results on data from the House. A number of tests suggest that senators react to the opportunity costs of holding office. Investigating selection effects, I find that legislative specialists are attracted the most in the Senate. Preliminary evidence suggests that the least wealthy respond most strongly in the House. This suggests that the revolving door shapes the skill set of legislators and the representation voters receive.

Reward or Punishment? The Distribution of Life-Cycle Returns to Political Office

“…On the one hand, politicians are, in addition to having a relatively high income while in office, generally rewarded with unusually high pensions vis-à-vis average pensions found in the labor market, and these should evidently be included in an analysis of returns to office. In addition, deferred opportunities for ex-politicians may arise through revolving doors, whereby they become board members or high ranked employees in private organizations (Weschle, 2019;Egerod, 2020). On the other hand, some politicians may experience an earnings penalty after their parliamentary career, either because they miss out on nonpolitical work experience that they otherwise would have accumulated in their regular career or due to an unwillingness of employers to hire certain former politicians.…”

Resignation as Promotion? Executive Turnover and Early Departures in the Argentine Congress, 1983–2017

“…Lastly, it is worth noting that legislators' perception of their office as a “springboard” from which to jump to more valuable positions—up to, and including, voluntary resignations—turns legislative branches into marginal policymaking bodies (Jones et al 2002), affects their behavior while in office (Egerod Forthcoming), and may make the legislature a weak counterpart of dominant executives (Cox and Morgenstern 2001). That said, the overall impact of resignations on voter representation is not straightforward: if the most relevant positions are in executive offices and the bureaucracy, voters' substantive interests may be better served by legislators who resign in order to assume these positions than by those who stay.…”

“…The same decision was made by Reps. Deb Haaland and Marcia Fudge in March 2021, after being confirmed to Joseph Biden's cabinet, emulating vice‐president Kamala Harris' resignation from the Senate on January 18. Legislators more interested in wealth than power often retire to maximize pension and other pecuniary benefits (Groseclose and Krehbiel 1994; Hall and Van Houweling 1995), or move to a lucrative job in the private sector, usually as lobbyists (Egerod Forthcoming; Weschle 2021).…”

“…Similarly, the “revolving door” literature has documented that would‐be lobbyists are well attuned to potential changes in external circumstances (Egerod Forthcoming; Weschle 2021).…”

Experience, institutions, and candidate emergence: the political career returns to state legislative service

“…In related research, Strickland (2019) finds that the demand for legislators-turned-lobbyists decreases once the market becomes saturated, leading to fewer state legislators entering lobbying as their expected value decreases. Egerod (2017) finds US Senators strategically retire when, ex ante, they expect higher returns in the lobbying sector. Consistent with this work, we hypothesize that stricter restrictions on outside options will lead to more candidates running for higher office.…”