Individuals Vs. Institutions. the Impact of Political Leaders’ Education and Profession on Public Deficits
Abstract: Political economy explanations of public debt and deficit policy have a tradition of more than 30 years, and research in this field did not cease so far. Yet, international differences in public debt and deficit still remain unexplained in considerable parts. While most of the literature concentrates on differences in political and budget institutions in order to explain debt and deficit differences, the original contribution of our paper is to shift focus to the personal characteristics of political agents, i.e. their expertise, their political experience, their political attitudes, preferences, values etc. We show that the personal background of a political leader considerably contributes to the explanation of his/her respective deficit policy. For instance, those political leaders who have been professional science economists before becoming politicians generate significantly higher deficits than the average. Also, career politicians (i.e. leaders who have been professional politicians for their whole work life or at least a very long time) with law education generate significantly higher deficits than career politicians with other educational background.
