Pay Incentives in Politics: Evaluating a Large-scale Salary Increase for Local Politicians

34 Pages Posted: 28 Sep 2022 Last revised: 8 Mar 2024

See all articles by Augusto Cerqua

Augusto Cerqua

Sapienza University Of Rome, Department of Social Sciences and Economics

Samuel Nocito

Sapienza University of Rome, Department of Social Sciences and Economics

Gabriele Pinto

Sapienza University Of Rome, Department of Social Sciences and Economics; Government of the Italian Republic (Italy) - Ragioneria Generale dello Stato (RGS)

Multiple version iconThere are 2 versions of this paper

Date Written: February 26, 2024

Abstract

We evaluate the impact of a recent reform that sharply increased the salaries of Italian local politicians on electoral competition and the valence attributes of the candidates elected. Exploiting misaligned election dates across Italian cities, we propose a novel methodology, the shifted difference-in-differences design (Sh-DiD), to estimate the reform's impact on municipalities up to 30,000 inhabitants, representative of almost the entire universe of Italy's local administrative units. We find a boost in the entry of new political candidates after the first post-reform electoral round, with no significant enhancement in the overall quality of the political class. These outcomes possibly stem from the varying distribution of compliers---whose candidacy decision is influenced by the reform---across diverse political and economic contexts. Thus, we find that in less affluent areas or those with fewer entry barriers, the pay rise drew a larger number of mayoral candidates, encouraging individuals from outside the political sphere to enter the competition. In the poorest contexts, we also observe a shift in the profile of councilors and members of the mayor's executive committee, where the pay rise attracted individuals with lower educational levels but with experience in white-collar positions.

Keywords: local governments, politicians' wages, shifted difference-in-differences design

JEL Classification: D04, D72, J45, C13

Suggested Citation

Cerqua, Augusto and Nocito, Samuel and Pinto, Gabriele, Pay Incentives in Politics: Evaluating a Large-scale Salary Increase for Local Politicians (February 26, 2024). Available at SSRN: https://ssrn.com/abstract=4225111 or http://dx.doi.org/10.2139/ssrn.4225111

Augusto Cerqua (Contact Author)

Sapienza University Of Rome, Department of Social Sciences and Economics ( email )

P.le Aldo Moro 5
Rome, 00185
Italy

Samuel Nocito

Sapienza University of Rome, Department of Social Sciences and Economics ( email )

Piazzale Aldo Moro, 5
Rome, Roma 00185
Italy

HOME PAGE: http://sites.google.com/site/samuelnocito/home

Gabriele Pinto

Sapienza University Of Rome, Department of Social Sciences and Economics ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Government of the Italian Republic (Italy) - Ragioneria Generale dello Stato (RGS) ( email )

Via XX Settembre 97
Rome
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
150
Abstract Views
663
Rank
339,618
PlumX Metrics