Deciles’ average income as a variable to anchor politicians’ wage

Abstract

We propose deciles average income, deficit and natural resource rents as objective variables to measure politicians’ economic performance. We begin by reviewing the literature linking politicians and their institutional choices to the macroeconomic environment. To continue, we review the relation between those macroeconomic variables and income percentiles. In order to evaluate how well they sum up politicians’ performance, we then use the variables previously reviewed to throw a generalized least squares estimation from panel data in a set of countries. Our results point towards the possibility of using those variables to anchor an incentive contract for politicians

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