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Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance

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Author Info
Claudio Ferraz
Frederico Finan

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Abstract

Recent studies have emphasized the importance of the quality of politicians for good government and consequently economic performance. But if the quality of leadership matters, then understanding what motivates individuals to become politicians and perform competently in office becomes a central question. In this paper, we examine whether higher wages attract better quality politicians and improve political performance using exogenous variation in the salaries of local legislators across Brazil’s municipal governments. The analysis exploits discontinuities in wages across municipalities induced by a constitutional amendment defining caps on the salary of local legislatures according to municipal population. Our main findings show that higher wages increases political competition and improves the quality of legislators, as measured by education, type of previous profession, and political experience in office. In addition to this positive selection, we find that wages also affect politicians’ performance, which is consistent with a behavioral response to a higher value of holding office.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14906.

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Date of creation: Apr 2009
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Handle: RePEc:nbr:nberwo:14906

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alan Gerber & Daniel Kessler & Marc Meredith, 2008. "The Persuasive Effects of Direct Mail: A Regression Discontinuity Approach," NBER Working Papers 14206, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Stefano Gagliarducci & Tommaso Nannicini, 2008. "Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection," Working Papers 346, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
    Other versions:
  3. Kaivan Munshi & Mark Rosenzweig, 2008. "The Efficacy of Parochial Politics: Caste, Commitment, and Competence in Indian Local Governments," NBER Working Papers 14335, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Kaivan Munshi & Mark Rosenzweig, 2008. "The Efficacy of Parochial Politics: Caste, Commitment, and Competence in Indian Local Governments," Working Papers 964, Economic Growth Center, Yale University. [Downloadable!]
  5. Berta Esteve-Volart & Manuel F. Bagües, 2009. "Are Women Pawns in the Political Game? Evidence from Elections to the Spanish Senate," Working Papers 2009-30, FEDEA. [Downloadable!]
  6. Kotakorpi, Kaisa & Poutvaara, Panu, 2009. "Pay for Politicians and Candidate Selection: An Empirical Analysis," IZA Discussion Papers 4235, Institute for the Study of Labor (IZA). [Downloadable!]
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