Capitol Gains: The Returns to Elected Office from Corporate Board Directorships

Abstract

We frequently observe that politicians accept lucrative private sector employment after leaving office, but we have little systematic evidence that politicians are able to profit from their government service. In this paper we examine the returns to office that many former senators and governors receive from serving on the boards of directors of publicly traded corporations, part-time positions where the average compensation exceeds $250,000 per year. We find that almost half of all former senators and governors serve on at least one board after leaving office. Using a fuzzy regression discontinuity design, we estimate that winning a Senate or gubernatorial election increases the probability of later serving on a corporate board by roughly 30%. For senators, we find that developing skills and connections through committee service, particularly in areas such as finance or military, is associated with increased board service after leaving office.