TY  - JOUR
AU  - Ferraz,Claudio
AU  - Finan,Frederico
TI  - Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14906
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14906
L1  - http://www.nber.org/papers/w14906.pdf
N1  - Author contact info:
Claudio Ferraz
Department of Economics
PUC-Rio
Rio de Janeiro, RJ, 22453-900
Brazil  
E-Mail: cferraz@econ.puc-rio.br

Frederico Finan
Department of Economics
University of California
508-1 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 310/794-5958
Fax: 310/825-9528
E-Mail: ffinan@econ.berkeley.edu
AB  - 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.
ER  -