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Moneycracy

  • Alessandro Fedele

    ()

    (Free University of Bolzano‐Bozen, School of Economics and Management)

  • Pierpaolo Giannoccolo

    ()

    (Dipartimento di Scienze Economiche, Università di Bologna)

How do wage and other financial benefits affect the set of candidates for political office? 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 is considered with skills as the sole characteristic of individuals. Welfare is increasing in the politicians’ wage since the best, i.e., high-skilled, individuals are attracted to politics only if remuneration covers their high opportunity costs. Our findings are remarkably different when also motivation is taken into account. Welfare is not likely to be maximum when the politicians’ wage is maximum for individuals are attracted whose motivation is well fitted with the market rather than the public sector. Finally, we provide an overview of the labor market of politicians in some Western countries and suggest that the Italian case might be representative of our inefficiency wage mechanism, which we call moneycracy.

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File URL: http://pro1.unibz.it/projects/economics/repec/bemps07.pdf
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Paper provided by School of Economics and Management at the Free University of Bozen in its series BEMPS - Bozen Economics & Management Paper Series with number BEMPS07.

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Length: 32 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:bzn:wpaper:bemps07
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  1. Josse Delfgaauw & Robert A.J. Dur, 2002. "Signaling and Screening of Workers' Motivation," Tinbergen Institute Discussion Papers 02-050/3, Tinbergen Institute, revised 04 Mar 2005.
  2. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
  3. Heyes, Anthony, 2005. "The economics of vocation or 'why is a badly paid nurse a good nurse'?," Journal of Health Economics, Elsevier, vol. 24(3), pages 561-569, May.
  4. Timothy Besley & Torsten Persson & Daniel M. Sturm, 2010. "Political Competition, Policy and Growth: Theory and Evidence from the US," Review of Economic Studies, Oxford University Press, vol. 77(4), pages 1329-1352.
  5. Frederico Finan & Claudio Ferraz, 2009. "Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance," Working Papers id:1889, eSocialSciences.
  6. Poutvaara, Panu & Takalo, Tuomas, 2007. "Candidate quality," Munich Reprints in Economics 19785, University of Munich, Department of Economics.
  7. Andrea Mattozzi & Antonio Merlo, 2005. "Political Careers or Career Politicians?," PIER Working Paper Archive 05-032, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2005.
  8. Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 835-864, August.
  9. Gagliarducci, Stefano & Nannicini, Tommaso, 2009. "Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection," IZA Discussion Papers 4400, Institute for the Study of Labor (IZA).
  10. Antonio Merlo & Vincenzo Galasso & Massimiliano Landi & Andrea Mattozzi, 2008. "The Labor Market of Italian Politicians," Working Papers 15-2008, Singapore Management University, School of Economics, revised Oct 2008.
  11. Tim Besley & Stephen Coate, . "An Economic Model of Representative Democracy," Penn CARESS Working Papers ecf70d639d700dba5327ab0c8, Penn Economics Department.
  12. Delfgaauw, Josse & Dur, Robert, 2010. "Managerial talent, motivation, and self-selection into public management," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 654-660, October.
  13. Francesca Barigozzi & Gilberto Turati, 2012. "Human health care and selection effects. Understanding labor supply in the market for nursing1," Health Economics, John Wiley & Sons, Ltd., vol. 21(4), pages 477-483, 04.
  14. Klaas Beniers & Robert Dur, 2007. "Politicians’ motivation, political culture, and electoral competition," International Tax and Public Finance, Springer, vol. 14(1), pages 29-54, February.
  15. Alessandro Fedele & Paolo Naticchioni, 2013. "Moonlighting Politicians: Motivation Matters!," BEMPS - Bozen Economics & Management Paper Series BEMPS08, School of Economics and Management at the Free University of Bozen.
  16. Francois, Patrick, 2000. "'Public service motivation' as an argument for government provision," Journal of Public Economics, Elsevier, vol. 78(3), pages 275-299, November.
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