Paper Labor Supply of Politicians

Using data on Members of the European Parliament (MEPs), we examine the impact of salaries on the composition and the behavior of legislators. Employing a differences-in-differences approach, we exploit the introduction of a law that equalized MEPs' salaries which had previously differed by as much as a factor of 10. Increasing salaries raises the fraction of MEPs who run for re-election but decreases the quality of elected MEPs (proxied by college quality). Salary has no discernible impact on effort or legislation output. Higher salaries induce more political competition.

Published in: Journal of the European Economic Association

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• Authored by Raymond Fisman Nikolaj A. Harmon Emir Kamenica Inger Munk
• 2015
• Political Economy