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Does the Strength of Incentives Matter for Elected Officials? A Look at Tax Collectors

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Abstract

In Pennsylvania local property taxes are collected by elected officials, known as tax collectors, whose compensation varies widely in both structure and level across municipalities. This paper analyses the existence of a pay-performance relationship for these officials. Using data on the percentage of real estate taxes that are actually collected at the municipal level, the paper finds that as the compensation tax collectors receive goes up, they collect more in taxes. This relationship is however true only for collectors who are compensated on a commission basis and not for collectors compensated on the basis of a flat salary. The paper also finds no relationship between the share of votes received by the tax collector and the percentage of property taxes collected during the previous term. This observation may account for the lack of a positive relationship between pay and performance for collectors compensated on the basis of a salary.

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  • Sutirtha Bagchi, 2017. "Does the Strength of Incentives Matter for Elected Officials? A Look at Tax Collectors," Villanova School of Business Department of Economics and Statistics Working Paper Series 34, Villanova School of Business Department of Economics and Statistics.
    • Handle: RePEc:vil:papers:34
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    File URL: http://repec.library.villanova.edu/workingpapers/VSBEcon34.pdf
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    More about this item

    Keywords

    Tax Collectors; Politician Salary; Productivity; Pay for Performance;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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