Are bureaucrats really paid like bureaucrats?
In an influential paper, Hall and Liebman (QJE, 1998) ask if senior corporate executives are really paid like bureaucrats, and conclude that they are not. In this paper, we ask if senior public service bureaucrats are really paid like bureaucrats, and conclude that they too are not. However, there is an important difference: whereas the Hall and Liebman executives face high-powered performance incentives, the bureaucrats in our sample are rewarded for expanding the size of the organisations they manage. While we cannot definitively rule out the possibility that this indicates efficient compensation of bureaucrats who provide more and better services, or face greater job complexity, the balance of our evidence is more consistent with the idea that the senior public servants in our sample are, on average, rewarded for ‘empire-building’, consistent with the public choice view of bureaucracy.