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Joseph Schumpeter Lecture: Paying Politicians: Theory and Evidence

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  • Timothy Besley

    (London School of Economics,)

Abstract

This paper looks at the theory behind the idea that paying politicians better will improve their performance. The paper lays out a political agency model with adverse selection and moral hazard where politicians are subject to two-period term limits. This model provides a number of predictions about how the pay of politicians affects agency problems. We also consider what happens when the pool of politicians is endogenous. The main ideas in the model are confronted with data on U.S. governors. (JEL: D72, J33) Copyright (c) 2004 The European Economic Association.

Suggested Citation

  • Timothy Besley, 2004. "Joseph Schumpeter Lecture: Paying Politicians: Theory and Evidence," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 193-215, 04/05.
    • Handle: RePEc:tpr:jeurec:v:2:y:2004:i:2-3:p:193-215
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    References listed on IDEAS

    as
    1. Timothy Besley & Anne Case, 2003. "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 7-73, March.
    2. Besley, Timothy & Smart, Michael, 2007. "Fiscal restraints and voter welfare," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 755-773, April.
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    4. Daniel Diermeier & Michael Keane & Antonio Merlo, 2005. "A Political Economy Model of Congressional Careers," American Economic Review, American Economic Association, vol. 95(1), pages 347-373, March.
    5. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
    6. Panu Poutvaara & Tuomas Takalo, 2007. "Candidate quality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(1), pages 7-27, February.
    7. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 85-114.
    8. Smart, Michael & Sturm, Daniel M., 2013. "Term limits and electoral accountability," Journal of Public Economics, Elsevier, vol. 107(C), pages 93-102.
    9. Hans Gersbach, 2009. "Competition of politicians for wages and office," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(4), pages 533-553, May.
    10. Bruno S. Frey, 1997. "Not Just for the Money," Books, Edward Elgar Publishing, number 1183.
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    15. Martin J. Osborne & Al Slivinski, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(1), pages 65-96.
    16. Robert Barro, 1973. "The control of politicians: An economic model," Public Choice, Springer, vol. 14(1), pages 19-42, March.
    17. Di Tella, Rafael & Fisman, Raymond, 2004. "Are Politicians Really Paid Like Bureaucrats?," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 477-513, October.
    18. Carrillo, Juan D. & Mariotti, Thomas, 2001. "Electoral competition and politician turnover," European Economic Review, Elsevier, vol. 45(1), pages 1-25, January.
    19. Messner, Matthias & Polborn, Mattias K., 2004. "Paying politicians," Journal of Public Economics, Elsevier, vol. 88(12), pages 2423-2445, December.
      • Matthias Messner & Mattias Polborn, 2003. "Paying Politicians," Working Papers 246, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    20. Avinash Dixit, 2002. "# Incentives and Organizations in the Public Sector: An Interpretative Review," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 696-727.
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    22. Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-141, January.
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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