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Political selection of public servants and parliamentary oversight

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Abstract

In this paper, we propose a framework to integrate the identity of legislators in a politico-economic analysis of parliamentary oversight. Legislators decide about the effort they invest in oversight activities depending on their individual control costs and the level of electoral competition. We focus on public servants elected to parliament who face a conflict of interests but also have lower control costs due to their experience and information advantage. If held accountable, oversight becomes a relatively attractive activity for them to win votes. For German Laender, we find that the fraction of public servants in parliament is positively related to the number of submitted parliamentary interpellations. This result holds when instrumenting the fraction of public servants in parliament with its institutional determinants. Moreover, a mixed-member electoral system as well as a tighter race between the two biggest parties is related to more, a larger number of parties in parliament to less minor interpellations.

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Notes

  1. For our purpose, we use the terms parliamentary control, oversight, and monitoring interchangeably. For descriptions of oversight see, e.g., Rosenthal (1981) and Patzelt (2005).

  2. As to public servants, we include all employees that receive public pay and have a work contract under public law; i.e., for example, educational professionals such as teachers or university professors, public servants or employees in the public administration, and members of the judiciary or the police.

  3. Depending on the legal framework and the period analyzed, preference may be given to either the term inquiry or the term interpellation. Since the economic interpretation in our context is the same, we abstract from such differences in terminology and rather use the terms interchangeably.

  4. The minor interpellation was submitted on February 17, 1998 (parliamentary printed matter 12/2886) and the government replied on April 6, 1998 (parliamentary printed matter 12/2997). Reporting on the air fare scandal was in all major German newspapers such as the Frankfurter Allgemeine Zeitung, the Süddeutsche Zeitung, Spiegel, and Fokus.

  5. For a discussion about outside earnings and absenteeism, see Gagliarducci et al. (2010), for a discussion of outside earnings and electoral competition, see Becker et al. (2009), and for a comprehensive overview about politicians’ outside earnings see Diermeier et al. (2005) for the US Congress and Merlo et al. (2010) for the Italian parliament.

  6. Please note that there are, of course, substantial differences with respect to (former) public servants’ knowledge of administrative matters depending on their branch, function and position within the public service.

  7. A fiduciary model of politicians’ behavior is proposed in Besley (2006).

  8. However, it might be argued that a coordinated behavior of public servants in parliament is difficult to implement given the heterogeneity of public servants with respect to party affiliation, branch, function and position within the public service.

  9. For the German federal parliament see; e.g., Kintz (2010) who reports a higher share of public servants in the Social Democratic Party (SPD).

  10. The public service in Germany includes all employees that receive public pay and have a work contract under public law. We are aware that there are differences in the legal status between the different occupational (sub)categories of the public service (i.e., public servants (Beamte) or employees in the public service (Angestellte im öffentlichen Dienst). However, for the scope of our analysis, there are no important differences regarding the conditions to run for parliament or the conditions of guaranteed reemployment after the termination of a mandate. Professionals from the public service, typically represented in parliaments, come from professions in education (i.e., teachers or university professors), are police officials, magistrates, ministers, political public servants, (senior-) officials in various fields of public administration, mayors and district administrators (Landräte) or employees of public enterprises. Privatizations, such as the major privatizations in the 1990s of Deutsche Post and Deutsche Telekom are taken into account. In 2005, the fraction of public servants in the working population amounted to 13.3 %.

  11. Further institutions to control government behavior include the right to demand the attendance of members of the government (Ministerzitierung), public auditing institutions (Rechnungshöfe), specialized offices of ombudspersons (e.g., the commissioner for the armed forces), petition committees, and the judicial review (Normenkontrollklage) before the German constitutional court. For an overview of the German institutional framwork see Schindler (1999). For a comparative survey on oversight instruments in national parliaments see Yamamoto (2007).

  12. For a discussion of parliamentary interpellation instruments see Russo and Wiberg (2010).

  13. In particular, we draw on Kalke and Raschke (2004), Mielke and Reutter (2004), Raschke and Kalke (1994), Reutter (2008) and Schäfer (2005).

  14. In most Laender with a mixed member electoral system, each voter has two votes, a first vote and a second vote. The first vote is directly attributed to a candidate who represents the electoral district (majority voting component). The candidate who obtains the majority of first votes in the districts is elected to parliament by a direct mandate. With the second vote, the citizens vote for the party which may then, in accordance with its share of party votes, send candidates from closed party lists to parliament. This is the proportional voting component in the electoral system. For a detailed description of the electoral system including the discussion of bonus seats (Überhangmandate), compensatory additional list seats (Ausgleichsmandate) and further differences between the Laender, see Massicotte (2003).

  15. If we do not transform the dependent variable, we have a count data setting. The negative skews of the three different dependent variables take values between 1.1 and 2.7 indicating only a slightly skewed shape. This does not require a model specification approach different from ordinary least squares. In our robustness checks with negative binomial models, we receive similar results.

  16. As a further robustness check, we run the baseline estimations computing robust standard errors taking into account heteroskedasticity and serial correlation. We found qualitatively similar results. However, the calculation of robust standard errors traditionally presupposes a large number of cross-sectional units. This condition is not given in the present analysis since we only have 16 Laender. (Note though as recent contributions (see e.g., Kézdi 2004) show that the general robust standard error estimator (introduced to the fixed-effects estimator by Arellano 1987) also behaves well in finite samples.) Moreover, in our full sample the minimum number of observations per Land used to compute the disturbance of the covariance matrix is two for Mecklenburg-Lower-Pomerania and Saxony, and three for the other new German Laender. This small numerical basis renders the computation of standard errors unreliable and quite fragile. Due to these two concerns, we follow the conservative approach recommended by Angrist and Pischke (2009, chapter eight) and take whatever standard errors are larger (robust or conventional) as our measure of precision.

  17. Nickell (1981) shows that the least squares dummy variables estimator (the common fixed effects estimator) is not consistent for finite T in dynamic panel data models. A number of consistent estimators, such as Arellano and Bond (1991) and Anderson and Hsiao (1982) have been proposed as alternatives to the least squares dummy variable estimator. However, the properties of the proposed estimators hold for large samples (large N) only. Bruno (2005) presents a bias-corrected least squares dummy variables estimator for dynamic (unbalanced) panel data models with a small number of cross-sectional units as it is the case in our empirical model. Here, the Arellano–Bond estimator is chosen to initialize the bias correction. We undertake 100 repetitions of the procedure to bootstrap the estimated standard errors. The results do neither change qualitatively with a different number of repetitions nor when we choose the Anderson–Hsiao estimator to initialize the bias correction.

  18. Since the variable covering constitutional parliaments always coincides with the first observation in a Laender-time series, it is dropped in the first and second specification.

  19. Additionally separating a sample for elections up to 2005 is not meaningful as the number of observations differs only by one completed legislative period compared to the full sample.

  20. The result of the first-stage estimation for the instruments for the fraction of public servants is as follows: \(-\)0.076  \(\times \) strict incompatibility (0.035) + \(-\)0.061  \(\times \) soft incompatibility (0.037) + 0.069  \(\times \) strict incompatibility  \(\times \) fulltime parliament (0.027) + 0.036  \(\times \) pension benefit (0.021) + 0.084  \(\times \) abeyance compensation (0.024) + 0.069  \(\times \) automatic promotion (0.036) + \(-\)0.055  \(\times \) other privileges (0.023). The results for the further variables in the first stage are as follows: 0.045  \(\times \) mixed member electoral system (0.031) + 0.001 margin of victory (0.001) + 0.013 new party (0.008) + 0.006 number of parties (0.009) + 0.002 seat share of the SPD (0.001) + 0.006 coalition government by major parties (0.02) + 0.026 constitutional parliament (0.067) + 0.022 oral inquiries exercisable (0.034). The coefficients for the indicators of the length of the legislative period as well as for the fixed effects are not reported. The \(F\)-statistic of the first-stage regression is 15.90.

  21. Excluding the new German Laender alleviates the problem of having too few observations in one panel in order to reasonably compute the disturbance of the covariance matrix.

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Authors and Affiliations

  1. Faculty of Business and Economics, University of Basel, Peter Merian-Weg 6, 4002 , Basel, Switzerland

    Thomas Braendle & Alois Stutzer

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  1. Thomas Braendle
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Correspondence to Alois Stutzer.

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Revised version for the journal Economics of Governance. We are grateful to two anonymous referees, Tim Besley, Beat Blankart, Bruno S. Frey, Vincenzo Galasso, Martin Hellwig, Thorsten Henne, Simon Luechinger, Manuela Merki, Tommaso Nannicini, Michael Zehnder, seminar participants at Bocconi University, Max-Planck-Institute Bonn, CIRCaP University of Siena, and participants at the CLEF Annual Meeting at the Yale Law School, the Meeting of the Swiss Society of Economics and Statistics in Fribourg, and the Meeting of the European Public Choice Society in Rennes for helpful comments. Special thanks go to Laura Sochaczewski and Michaela Slotwinski for excellent research assistance. We also thank the WWZ Forum for financial support, the IGIER at Bocconi for its hospitality, and the parliamentary information services and parliamentary libraries of the German Laender for generously providing information about the parliamentary process.

Appendix

Appendix

See Tables 3, 4, 5, 6, 7, 8 and 9.

Table 3 Control instruments in German Laender parliaments
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Table 4 Example of a minor interpellation
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Table 5 Descriptive statistics for the dependent and independent variables
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Table 6 Descriptive statistics for the fraction of public servants elected to German Laender parliaments
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Table 7 Electoral rules applied in the German Laender
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Table 8 Correlation matrix
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Table 9 Determinants of minor interpellations: robustness checks. Dependent variable: ln (number of minor interpellations)
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Braendle, T., Stutzer, A. Political selection of public servants and parliamentary oversight. Econ Gov 14, 45–76 (2013). https://doi.org/10.1007/s10101-012-0120-z

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