The Review of Economics and Statistics 2026
Outside Income as a Signal: Evidence from Politicians and Voters
Abstract
We study how public disclosure of politicians’ outside income affects their behavior. We exploit a disclosure reform targeting German federal MPs and tax-return data in a difference-indifferences setup using unaffected state MPs as controls. MPs increase their outside income by 24%, driven by likely right-leaning MPs. A representative survey experiment uncovers that right-leaning voters interpret outside income as a signal of competence and hard work, while left-leaning voters associate it with weaker representation. Consistent with this, we show that newspapers cover right-leaning MPs’ outside activities more favorably. Our findings suggest that politicians strategically use public disclosure as a signaling tool.
- DOI
- 10.1162/rest.a.1834
- Pages
- 1-45
- Language
- en
- Sources
- crossref openalex