Abstract
Can economic incentives change policymakers' voting behavior and increase government stability? Using newly collected data on 427 confidence votes in the Italian Parliament between 2001-2022, I study the impact of a minimum tenure requirement of 4.5 years to obtain a parliamentary pension introduced in 2008. Using a difference-in-discontinuities design, I find that the policy increases the probability of voting confidence in the government by 3 percentage points. The reform increases confidence votes by majority MPs, whereas it decreases confidence votes by opposition MPs. These results confirm the predictions of a simple political-agency model in which policymakers have opportunistic motives. Beyond the direct incentive to keep the current government in power, the policy increases party loyalty: it induces opposition (majority) MPs to vote against (for) the government so as to increase the probability of being re-elected and reach the tenure requirement in a second term in case the government falls. A tenure requirement for parliamentary pensions increases government stability but also party polarization, ultimately reducing voters' welfare.