Revolving-Door Politics and Income Inequality: A Study on the Role of Finance Ministers in Europe

Do politicians act in their voters’ or in their personal interests? Representative democracy rests on the assumption that voters elect members of parliament, who in turn elect the government to represent them. Yet, recent research indicates that the preferences of individual politicians can have important policy effects beyond and above the party agenda. In this paper we utilize new data on the professional careers of finance ministers before and after their ministerial tenure in 18 parliamentary democracies over forty years to test the revolving-door politics hypothesis. We investigate whether the rise in income inequality can be partly explained by the policy preferences of finance ministers. We hypothesize that ministers’ policy preferences are influenced by their professional experience as well as by their future career plans, such as staying in politics or moving to the corporate sector. This study is the first to study cross-nationally the revolving-door hypothesis, the movement of policy-makers between private and public sectors, and its effects on policy outcomes.