Competition of politicians for wages and office

We examine a model in which two politicians compete for office and for wages. Their remunerations are either set by the public or are offered competitively by the candidates during campaigns. Our main finding shows that competitive wage offers by candidates lead to lower social welfare than remunerations predetermined by the public, since wage competition may lead to higher wage costs or to the election of less competent candidate

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

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.

Are Politicians Really Paid Like Bureaucrats?

We provide the first empirical analysis of gubernatorial pay. Using US data for 1950-90 we document, contrary to widespread assumptions, substantial variation in the wages of politicians, both across states and over time. Gubernatorial wages respond to changes in state income per capita and taxes, after controlling for state and time fixed effects. The economic effects seem large: governors receive a 1 percent pay cut for each ten percent increase in per capita tax payments and a 4.5 percent increase in pay for each ten percent increase in income per capita in their states. There is strong evidence that the tax elasticity reflects a form of reward-for-performanc.' The evidence on the income elasticity of pay is less conclusive, but is suggestive of rent extraction' motives. Lastly, we find that democratic institutions seem to play an important role in shaping pay. For example, voter-initiatives and the presence of significant political opposition lead to large reductions in the income elasticity of pay, and to large increases (at least double) in the tax elasticities of pay, relative to the elasticities that are observed when these democratic institutions are weaker.

Pay for Politicians and Candidate Selection: An Empirical Analysis

A growing theoretical literature on the effect of politicians’ salaries on the average level of skills of political candidates yields ambiguous predictions. In this paper, we estimate the effect of pay for politicians on the level of education of parliamentary candidates. We take advantage of an exceptional reform where the salaries of Finnish MPs were increased by 35 % in the year 2000, intended to make the pay for parliamentarians more competitive. A difference-in-differences analysis, using candidates in municipal elections as a control group, suggests that the higher salary increased the fraction of candidates with higher education among female candidates, while we find no significant effect for male candidates.pay for politicians, candidate selection, gender differences in politics

The Political Economy of Institutions and Corruption in American States.

Theoretically, this paper draws on political agency theory to formulate hypotheses. Empirically, it shows that political institutions have a role in explaining the prevalence of political corruption in American states. In the states, a set of democracies where the rule of law is relatively well established and the confounding effects of differing electoral systems and regimes are absent, institutional variables relating to the openness of the political system inhibit corruption. That is, other things equal, the extent to which aspiring politicians can enter and gain financial backing, and to which voters can focus their votes on policies and thereby hold incumbent politicians accountable for policy outcomes and find substitutes for them if dissatisfied with those outcomes, reduce corruption as a general problem of agency. These institutional effects are estimated in the presence of controls for variables representing other approaches.

Public employment and the double role of bureaucrats

Bureaucrats in the government sector have a double role since they are both suppliers and demanders of public employment; they are publicly employed (supply labor) and they have an important say in deciding the size of the municipal employment (demand labor). In this paper we present and estimate a theoretical model that focuses on this double role of bureaucrats. The predictions from the theoretical model are supported by our empirical results: The estimates based on data from Swedish municipalities 1990–2002, show that wages have smaller effects on the demand for bureaucrats than on the demand for other types of public employees. Actually wages have no significant effect on the number of bureaucrats the municipality employs.Public employment; bureaucrats

Accountability and corruption : political institutions matter

Using a cross-country panel, Lederman, Loayza, and Soares examine the determinants of corruption, paying particular attention to political institutions that increase political accountability. Previous empirical studies have not analyzed the role of political institutions, even though both the political science and the theoretical economics literature have indicated their importance in determining corruption. The main theoretical hypothesis guiding the authors?empirical investigation is that political institutions affect corruption through two channels: political accountability and the structure of the provision of public goods. The results suggest that political institutions are extremely important in determining the prevalence of corruption: democracy, parliamentary systems, political stability, and freedom of the press are all associated with lower corruption. In addition, the authors show that common findings of the earlier empirical literature on the determinants of corruption?elated to openness and legal tradition?o not hold once political variables are taken into account.Corruption&Anitcorruption Law,Decentralization,Pharmaceuticals&Pharmacoeconomics,Public Sector Corruption&Anticorruption Measures,Poverty Monitoring&Analysis,National Governance,Governance Indicators,Pharmaceuticals&Pharmacoeconomics,Corruption&Anitcorruption Law,Public Sector Corruption&Anticorruption Measures

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

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 increases in salaries not only attracts more candidates, but more educated ones. Elected officials are in turn more educated and stay in office longer. Higher salaries also increase legislative productivity as measured by the number of bills submitted and approved, and the provision of public goods.politician salary, quality, political agency

Orientalism at work?: Dundee’s response to competition from Calcutta, circa 1870-1914

From the late nineteenth century the Dundee jute industry faced intensifying competition from Calcutta. This article examines the responses in Dundee to this competition, focusing upon the ways Dundonians understood Calcutta and India, and how these understandings shaped the debate on possible lines of action. It argues that the diversity of approaches to the threat, inter-linked with the complexities of local politics, led to a concentration of effort on seeking to establish and then strengthen Indian factory legislation. The severity of competition from another empire country posed acute dilemmas for pro-imperial politics in the city: how could such a politics be sustained if the local economy was being so harmed by Calcutta's invasion of Dundee's markets, yet a protective response was ruled out by the realities of imperial policy

THE RECESSION, BUDGETS, COMPETITION, AND REGULATION: SHOULD THE STATE SUPPLY BESPOKE PROTECTION? RESEARCH SERIES NUMBER 12 OCTOBER 2009

Recessions are harsh. Demand declines. Firms shed labour, reduce output or file for bankruptcy. Pressure mounts to reduce prices and increase productivity. Returns decline; margins are squeezed; dividends are suspended. Unemployment increases. Firms seek to delay payments to suppliers, while simultaneously demanding suppliers reduce input prices and extend credit. Carefully assembled workforce teams are broken up. New products and innovations are put on hold. Competition is characterised as cut-throat, destructive and excessive. Faith in markets begins to be questioned