Working Paper: CEPR ID: DP13051
Authors: Ruben Enikolopov
Abstract: Abstract Traditionally, bureaucrats are viewed as a stereotypical example of employees with flat pay schedules and low-powered incentive schemes. This paper provides evidence that the wages of a particular group of senior bureaucrats – city managers in US cities – are tightly connected to city outcomes. City outcomes affect city managers' wages not only in the city in which they are currently employed, but also in the city in which they work afterwards. At the same time, the salaries of city managers do not react to observable exogenous shocks to city outcomes. These results suggest that the relationship between city outcomes and the wages of city managers reflects a reward for performance, rather than rent extraction, and that the power of these incentives is sufficiently strong.
Keywords: City Managers; Bureaucrats; Pay for Performance; Incentives of Politicians
JEL Codes: J3; H7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| city performance (R53) | city managers' wages (J39) |
| city growth (population and tax revenues) (R11) | city managers' wages (J39) |
| city managers' performance in one city (H70) | city managers' wages in subsequent positions (J39) |
| exogenous shocks (F41) | city managers' wages (J39) |