Are Bureaucrats Really Paid Like Bureaucrats?

Abstract

In an influential paper, Hall and Liebman (QJE, 1998) ask if corporate CEOs are really paid like bureaucrats, and conclude that they are not. In this paper, we ask if senior bureaucrats are really paid like bureaucrats, and conclude that they too are not. However, there is an important difference: whereas the Hall and Liebman CEOs face high-powered performance incentives, the bureaucrats in our sample are rewarded for what appears to be ‘empire building’, consistent with the public choice view of bureaucracy.

Keywords: bureaucrats, remuneration, motivation, incentives, empire building

JEL Classification: G34, J33