Do higher politician salaries reduce corruption and improve governance?
Chin, Hong Xiang
Low, Guo Quan
Date of Issue2016
School of Humanities and Social Sciences
Do higher politician salaries reduce corruption and improve governance? Previous empirical studies focusing on specific countries have suggested conflicting conclusions, while no studies to date has examined a panel analysis of this relation across countries and over time. Our paper addresses this gap by gathering a novel primary dataset of 963 top politician and cabinet minister salaries through official and non-official sources, which spans across 144 countries from the period of 1873 to 2015. Based on our results, we find that (1) in non-democracies, (a) higher salaries of top politicians are associated with higher corruption and worse governance, while (b) higher salaries of cabinet ministers are associated with lower corruption and better governance; (2) in democracies, somewhat surprisingly, there is no association between politician salaries and corruption/quality of governance. We propose that our findings can be explained by: electoral pressure, peer pressure, and mutual monitoring effects.
Final Year Project (FYP)
Nanyang Technological University