We analyze the effect of municipal employees’ political representation
in municipal councils on local public spending. We use within-party,
as-good-as-random variation in close elections in the Finnish open-list
proportional election system to quantify the effect. One more councilor
employed by the public sector increases spending by about 1%. The effect
comes largely through the largest party and is specific to the
employment sector of the municipal employee. The results are consistent
with public employees having an information advantage over other
politicians, and thus, being able to influence policy.