Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection

By Stefano Gagliarducci, T. Nannicini. Social Science Research Network, 2013

378 citations recorded by the source corpus.

The wage paid to politicians affects both the choice of citizens to run for an elective office and the performance of those who are appointed. First, if skilled individuals shy away from politics because of higher opportunities in the private sector, an increase in politicians' pay may change their mind. Second, if the reelection prospects of incumbents depend on their in-office deeds, a higher wage may foster performance. We use data on all Italian municipal governments from 1993 to 2001 and test these hypotheses in a quasi-experimental framework. In Italy, the wage of the mayor depends on population size and sharply rises at different thresholds. We apply a regression discontinuity design to the only threshold that uniquely identifies a wage increase – 5,000 inhabitants – to control for unobservable town characteristics. Exploiting the existence of a two-term limit, we further disentangle the composition from the incentive component of the effect of the wage on performance. Our results show that a higher wage attracts more educated candidates, and that better paid politicians size down the government machinery by improving internal efficiency. Importantly, most of this performance effect is driven by the selection of competent politicians, rather than by the incentive to be reelected.

Subfields: Economics and Econometrics, Safety Research

View Paper: https://www.semanticscholar.org/paper/2e70d020dd64ec8d590afffef7a0d7111488a664

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. U. Troiano
2. L. Casaburi
3. T. Nannicini
4. Francesco Drago
5. Francesco Sobbrio
6. V. Grembi
7. James Alm

In Safety Research

1. U. Troiano
2. L. Casaburi
3. Francesco Drago
4. Francesco Sobbrio
5. T. Nannicini

Citations in the corpus

• Meet the Press: How Voters and Politicians Respond to Newspaper Entry and Exit (2014, positive): “and macro-region-by-year fixed effects (as we do in our empirical analysis).(22) In particular, we regress the event of entry or exit (a variable equal to zero if no entry or exit occurs and equal to 1 and -1 otherwise) on the set of observable characteristics, namely, the number of existing newspap”
• Moderating Political Extremism: Single Round vs. Runoff Elections under Plurality Rule (2016, neutral): “This is a common practice in many runoff systems, including municipal elections in Italy.”
• Regression Discontinuity Designs Based on Population Thresholds: Pitfalls and Solutions (2015, neutral): “…well known (see Barreca et al. 2011; Imbens and Lemieux 2008; Lee and Lemieux 2010; Urquiola and Verhoogen 2009).10 Strategic sorting in population figures has been documented by Litschig (2012) for Brazil, and it has been briefly mentioned by Gagliarducci and Nannicini (2013) for the Italian case.”
• Is Voter Competence Good for Voters?: Information, Rationality, and Democratic Performance (2014, neutral): “…of electoral agency, several papers examine, in reduced form, how changes to various features of the institutional environment affect the quality of governance (Besley and Case 2003; de Janvry, Finan and Sadoulet 2012; Ferraz and Finan 2011; Gagliarducci and Nannicini 2013; Gordon and Huber 2007).”
• Disentangling Accountability and Competence in Elections: Evidence from U.S. Term Limits (2011, neutral): “Gagliarducci and Nannicini (2009) use a combination of term limits and institutional randomness in wages paid to Italian mayors to disentangle accountability and competence.”