Salaries and Work Effort of Politicians

Members of the Turkish Parliament (MPs) earn a base salary. In addition, they earn a bonus, if they are retired from the labor force. A law enacted in January 2012 pegged this bonus to 18% of the salary of the President of Turkey. As a result, salaries of the retirement eligible MPs increased substantially. Using a data set of MPs who served in the Parliament between 2007 and 2015, and exploiting the variation in the timing of retirement of MPs and the law change in 2012, we investigate the impact of MP salaries on their work effort. Our outcome variable, the number of words MPs deliver on the Parliament floor, is unique, and it is superior to the previous measures of work effort. Our results indicate that MPs whose salaries increased starting with 2012 delivered fewer words during the Parliamentary meetings. Specifically, a one percent increase in MP salaries leads to about 0.4% decrease in the number of words delivered on the Parliament floor. We find evidence that an increases in salary reduces other job related activities of politicians such as the number of law proposals drafted, questions asked and motions for investigation/inquiry. We also provide evidence for the importance of the number of words delivered for legislative production. Specifically, for every 13,000 words delivered on the Parliament floor, one new legislation is passed. JEL Codes: J22, J26, J33, J45