Resumen de Optimal wages for politicians

Mohammad Reza Mirhosseini

• I consider a society that has to decide on the wage that it offers for an elected official. Potential candidates differ in their abilities, which determines their effectiveness in office and their opportunity cost. They consider the wage when deciding whether to enter as candidates, and if they do, how hard to campaign. The remuneration for the official that maximizes ordinary citizens’ expected utility is a function of the proportion of competent voters who are better informed about the quality of the candidates and are not influenced by the campaign. I use the data on U.S. governor salaries over six decades to evaluate some implications of the model. Specifically, the proportion of the state's population with a bachelor's degree—a proxy for the proportion of competent voters—is negatively correlated with the governors’ salaries when controlled for other factors.