Labor Supply of Politicians
Coauthor(s): Nikolaj Harmon, Emir Kamenica, Inger Monk.
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Using data on Members of the European Parliament (MEPs), we examine the impact of salaries on the composition and the behavior of legislators. Employing a differences-in-differences approach, we exploit the introduction of a law that equalized MEPs' salaries which had previously differed by as much as a factor of ten. Increasing salaries raises the fraction of MEPs who run for reelection but decreases the quality of elected MEPs (proxied by college quality.) Salary has no discernible impact on effort or legislative output. Higher salaries induce more political competition.
Fisman, Raymond, Nikolaj Harmon, Emir Kamenica, and Inger Monk. "Labor Supply of Politicians." Columbia Business School, 2013.