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

Claudio Ferraz and Frederico Finan

No 14906, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D72 D78 J33 (search for similar items in EconPapers)
Date: 2009-04
New Economics Papers: this item is included in nep-cdm, nep-pol and nep-soc
Note: POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (148)

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Working Paper: Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance (2009)
Working Paper: Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance (2008)
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