Ripple effects of economic crisis. The influence of economic cycles on political selection in spanish municipalities

Abstract

How do economic cycles, especially recessions, affect the competence of politicians as measured by their education? This study examines the causal effect of unemployment shocks during the Great Recession of 2007/2008 on the selection of local politicians in Spanish municipalities. Despite extensive research on what forces determine political selection and the competence of politicians, the impact of economic downturns on the quality of politicians, as measured by unemployment, has been thoroughly overlooked. Yet it is important to understand whether crises produce competent leaders who are able to steer society through troubled waters. Using high-quality data from the Spanish Ministry of Labor and Social Economy and the Ministry of Finance, this study analyzes the causal relationship between economic cycles, as measured by unemployment, and the educational level of local politicians. I find that only severe cases of economic downturns have a negative impact on the educational level of politicians.