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

Peichl, Andreas and Pestel, Nico and Siegloch, Sebastian (2011): The politicians’ wage gap: insights from German members of parliament.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: politicians’ wage gap; citizen-candidate model; office remuneration; outside earnings
• Subjects: J - Labor and Demographic Economics > J4 - Particular Labor Markets > J45 - Public Sector Labor Markets; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; H - Public Economics > H8 - Miscellaneous Issues > H83 - Public Administration ; Public Sector Accounting and Audits; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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