Voters prefer more qualified mayors, but does it matter for public finances? Evidence for Germany

This paper studies the importance of politician's qualification, in terms of education and experience, for fiscal outcomes. The analysis is based on a large panel for 2,031 German municipalities for which we have collected information on municipal budgets as well as the election results and qualification levels of mayoral candidates. We principally use a Regression Discontinuity Design focusing on close elections to estimate causal effects. We find that mayors with prior experience in office indeed tend to reduce the level of local public debt, lower total municipal expenditures and decrease the local taxes. In contrast, the education level of the mayor exerts no significant effects on the overall fiscal performance of the municipality. The results are partly surprising as both education and experience are shown to matter greatly in the electoral success of mayoral candidates.