Moneycracy

Alessandro Fedele and Pierpaolo Giannoccolo

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: How do wage and other financial benefits affect the set of candidates for political office? In this theoretical paper, we answer the question by studying self-selection into politics of individuals with heterogeneous skills and heterogeneous motivations. Our predictions are in line with the efficiency wage results proposed by the extant literature when a benchmark model with skills as the sole relevant characteristic of individuals is considered. Welfare is increasing in the politicians'wage since the best, i.e., high-skilled, individuals are attracted to politics only if their remuneration covers their high opportunity costs. Our findings are remarkably different when motivation is also taken into account. Welfare is not likely to be maximized when the politicians'wage is relatively high, for high-skilled individuals with market-oriented rather than public-spirited motivation are attracted. Finally, we provide an overview of the labor market of politicians in Europe and suggest that the Italian Parliament might be representative of our inefficiency wage mechanism, which we call moneycracy.

JEL-codes: J24 J32 J45 P16 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-hrm and nep-pol
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Working Paper: Moneycracy (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp893

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