Can higher pay bring more honest and competent people into poor-country politics? I had dinner tonight with Fred Finan from UCLA. He and Claudio Ferraz use exogenous variation in the pay of Brazilian politicians to look at the effects of pay on performance. Their results: higher pay attracts more and better-educated politicians, and more businessmen and lawyers over farmers and soldiers. They are more likely to get reelected, and so are more experienced over time. They submit more bills and get more legisation approved.
This doesn’t mean they’re better people, only more productive. But higher salaries seem to increase the number of health clinics, schools, and school infrastructure programs (although there’s no effect on water and sanitation quality).
I’m reminded: Kenya’s politicians are some of the highest paid in the world–roughly $25,000 a month. A little excessive, yes. But I’m in the minority who think this might not be a bad thing. How better to insulate a politician from corruption and bribery? If it reduced bribery by just 20 percent (something totally unsupported) it would be the best money spent in the country. That’s a question worth answering.
Check out the working paper here. The big question on my mind: does better pay reduce the incentive to take bribes and kickbacks? Finan and Ferraz can’t say, but see another paper of theirs on audits and accountability in Brazil–another one with the potential to become a development classic.
The study is based upon Brazil, with higher levels of patronage, where political dynasties control towns and where a local concillor in a small town earns ten times the minimum wage. Corruption is high, but no so high as in Kenya, where, $25,000 a month is over 100 times the per capita income. Did not the country fall apart recently due to corruption. Compare that to the UK of 40 years ago, with local, independent, councillors selflessly serving the community for nothinh more than expenses.
Kenya’s politicians are some of the highest paid in the world–roughly $25,000 a month. A little excessive, yes. But I’m in the minority who think this might not be a bad thing. How better to insulate a politician from corruption and bribery?
While this may be as some general statement, Kenya is a bad example to use. The current high pay is THE result of corruption rather than some specific government action/policy designed to minimize it. The MPs vote on their own pay and they do not even pay tax on it. And despite this high level of pay, there is no evidence whatsoever that it is reducing incidents of corruption among the the MPs and ministers (Kenyan ministers, by the way, receive double salaries since all of them are MPs as well). The current minister of agriculture is under investigation for pocketing some proceeds of illegal maize sales, while a significant chunk of the country is experiencing food shortage. One only has to glance at Kenyan newspapers to see the level of corruption by these highly paid MPs. You might argue that the level of corruption would have been even higher without such high salaries but Kenyan politicians are among the most corrupt already. The arrival of Kibaki and the increasing salaries did not result in any drop in corruption perception or reality.
From another (Mongolian) context: Not sure that there would be less kickbacks taken – politics is so intrinsically linked to business connections and interests. A recent article for interest: http://en.news.mn/news/2033.
I think in the Mongolian case, higher salaries may promote more well-educated Mongolians to return from abroad and hopefully work to change the corrupt system.
http://www.asiangypsy.blogspot.com/search/label/Mongolians%20Abroad