Revisiting the Link between Politicians’ Salaries and Corruption

Abstract It has long been argued that paying politicians higher salaries should help decrease corruption. However, the empirical evidence is mixed, partly due to the large variation in contexts, research designs, conceptual definitions and measures of corruption, and the predominance of case studies with potentially limited generalizability. To alleviate these challenges, we evaluate uniformly defined and validated corruption risk indicators from an original dataset of more than 2.4 million government contracts in eleven EU countries, covering more than half of the European Union population and gross domestic product. To aid causal identification, we exploit sizable changes in salaries of local politicians tied to population size across close to 100 discrete salary thresholds. Applying fixed effects estimators, regression discontinuity, and difference-in-discontinuities designs, we consistently find that better-paid local politicians (by about 15 per cent on average) oversee less risky procurement contracts, by a third to one standard deviation on our measure of corruption risk.