Political leaders' socioeconomic background and fiscal performance in Germany

- Impact of the socioeconomic status of the head of government on fiscal policy.
- Sample encompasses the prime ministers of the German Laender.
- Low-status prime ministers are associated with higher public spending and deficits.
- Social mobility has an asymmetric influence on fiscal behaviour.

This paper investigates whether the socioeconomic status of the head of government helps explain fiscal performance. Applying sociological research that attributes differences in people's ways of thinking and acting to their relative standing within society, we test whether the social status of German prime ministers can help explain differences in fiscal performance among the German Laender. Our empirical findings show that the tenures of prime ministers from a poorer socioeconomic background are associated with higher levels of public spending and debt financing. Social mobility has an asymmetric influence: social climbers adapt to their new class, whereas downwardly mobile prime ministers remain primarily influenced by their parents' upper-class status.