The Private Sector Earnings of Politicians.

In many countries, members of parliament (MPs) are allowed to hold private sector jobs while in office, raising concerns that this is exploited to channel money towards influential politicians. In this paper, I analyze comprehensive new data on the annual private sector earnings of all members of the British House of Commons from 2010 to 2016. Using a within-MP design, I examine the effect of political influence on private sector earnings. I show that taking up a government position leads to a decrease in private sector earnings, while holding other positions, such as in the shadow cabinet or party leadership team, has no effect on private sector income. Leaving one's position leads to an increase over pre-position earnings for cabinet ministers, but not for anyone else. Thus, political power does not immediately translate into more or better-paid second jobs, and lucrative post-position jobs only go to the most successful politicians.