Do higher politician salaries reduce corruption and improve governance?

• Main Authors: Chin, Hong Xiang, Low, Guo Quan, Wang, Yiwei
• Other Authors: Giovanni Ko
• Format: Final Year Project
• Language: English
• Published: 2016
• Subjects: DRNTU::Social sciences
• Online Access: http://hdl.handle.net/10356/66923
• Institution: Nanyang Technological University

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.