The Relation between Public Managers’ Compensation and Governance

Abstract

A vast literature in the field of public organizations has analyzed several factors of the compensation of government senior managers. However, the institutional factors associated with high levels of compensation of public managers are hardly known. In particular, studies about the possible relation between factors of governance and compensation of public managers are scarce. The statistical evidence here reveals that in the OECD countries, high levels of compensation for central government senior manager (standardized with GDP per capita) seem to be associated with low government effectiveness, low regulatory quality, low freedom, low rule of law and control of corruption (in short, bad governance). These results suggest insights for general reforms of governance aimed to support equitably levels of compensation of public managers and efficiency of public institutions.

Keywords: compensation, public managers, governance, pay, salary, high public office, government effectiveness, regulatory quality, control of corruption

JEL Classification: D73, H0, J30, J33, J45, M12, M52