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The politicians’ wage gap: insights from German members of parliament

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  • Peichl, Andreas
  • Pestel, Nico
  • Siegloch, Sebastian

Abstract

Using a unique dataset of German members of parliament (MPs) this paper analyzes the politicians’ wage gap (PWG). After controlling for observable characteristics as well as accounting for election probabilities and campaigning costs, we find a positive income premium for MPs which is statistically and economically significant. Our results are consistent with the citizen candidate model: The PWG amounts to 35–65% when comparing MPs to citizens in an executive position. However, it shrinks to zero when restricting the control group to top-level executives. This suggests that German politicians do not receive excessive pay when compared to senior executives.

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  • Peichl, Andreas & Pestel, Nico & Siegloch, Sebastian, 2011. "The politicians’ wage gap: insights from German members of parliament," MPRA Paper 34595, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:34595
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    Cited by:

    1. Geys, Benny & Mause, Karsten, 2011. "Moonlighting politicians: A survey and research agenda," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2011-101, WZB Berlin Social Science Center.
    2. Peter T. Calcagno & Meg M. Montgomery, 2021. "The gender wage gap: an analysis of US congressional staff members," Public Choice, Springer, vol. 188(1), pages 183-201, July.
    3. Auerbach, Jan, 2022. "Productive Office and Political Elitism," MPRA Paper 114582, University Library of Munich, Germany.
    4. Arnold, Felix & Kauder, Björn & Potrafke, Niklas, 2014. "Outside earnings, absence, and activity: Evidence from German parliamentarians," European Journal of Political Economy, Elsevier, vol. 36(C), pages 147-157.
    5. Antonio Estache & Renaud Foucart, 2016. "Corruption and Incompetence in Public Procurement," Working Papers ECARES ECARES 2016-05, ULB -- Universite Libre de Bruxelles.
    6. Bernecker, Andreas, 2014. "Do politicians shirk when reelection is certain? Evidence from the German parliament," European Journal of Political Economy, Elsevier, vol. 36(C), pages 55-70.
    7. Polk, Andreas, 2017. "Lobbyism in Germany: What do we know?," Beiträge zur Jahrestagung 2016 (Witten/Herdecke) 175190, Verein für Socialpolitik, Ausschuss für Wirtschaftssysteme und Institutionenökonomik.
    8. Jan Auerbach, 2018. "Office-Holding Premia and Representative Democracy," Discussion Papers 1802, University of Exeter, Department of Economics.
    9. Berg, Heléne, 2020. "Politicians’ payments in a proportional party system," European Economic Review, Elsevier, vol. 128(C).
    10. Björn Kauder & Manuela Krause & Niklas Potrafke, 2018. "Electoral cycles in MPs’ salaries: evidence from the German states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 981-1000, August.
    11. Bernardino Benito & Francisco Bastida & Ana-María Ríos & Cristina Vicente, 2014. "The causes of legal rents extraction: evidence from Spanish municipalities," Public Choice, Springer, vol. 161(3), pages 367-383, December.
    12. Maria M. Campos & Domenico Depalo & Evangelia Papapetrou & Javier J. Pérez & Roberto Ramos, 2017. "Understanding the public sector pay gap," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-29, December.
    13. Heléne Berg, 2018. "Politicians' Payments in a Proportional Party System," CESifo Working Paper Series 7278, CESifo.
    14. Berg, Helene, 2018. "Politicians’ Payments in a Proportional Party System," Research Papers in Economics 2018:3, Stockholm University, Department of Economics.
    15. Lukasz Wiktor Olejnik, 2019. "Do coalition councillors grow rich faster? Quantitative analysis of asset declarations," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 18(1), pages 47-60, March.
    16. Karsten Mause, 2014. "Self-serving legislators? An analysis of the salary-setting institutions of 27 EU parliaments," Constitutional Political Economy, Springer, vol. 25(2), pages 154-176, June.
    17. Schötz, Lukas, 2016. "Power and rents - political influence on rent extraction: Quasi-experimental evidence for Bavaria," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-70-16, University of Passau, Faculty of Business and Economics.
    18. Estache, Antonio & Foucart, Renaud, 2018. "The scope and limits of accounting and judicial courts intervention in inefficient public procurement," Journal of Public Economics, Elsevier, vol. 157(C), pages 95-106.

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    More about this item

    Keywords

    politicians’ wage gap; citizen-candidate model; office remuneration; outside earnings;
    All these keywords.

    JEL classification:

    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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