Do Incompetent Politicians Breed Populist Voters? (with Federico Boffa and Vincenzo Mollisi)

We exploit a sharp discontinuity in the compensation of local politicians in Italy as a function of municipal population. As their wage increases sharply, better politicians run for and get elected to local office, and local government becomes more efficient. Our key finding is that this plausibly exogenous improvement in the quality of local politicians causes a statistically and economically significant decline in support for the populist, anti-establishment Five-Star Movement in upper-level (regional, national, and European) elections, mostly in favor of the outgoing incumbents.