Skip to content
Licensed Unlicensed Requires Authentication Published by De Gruyter June 9, 2021

Does the Strength of Incentives Matter for Elected Officials? A Look at Tax Collectors

Sutirtha Bagchi ORCID logo EMAIL logo


In Pennsylvania local property taxes are collected by elected officials, known as tax collectors, whose compensation varies widely in both structure and level across municipalities. This paper analyses the existence of a pay-performance relationship for these officials. Using data on the percentage of property taxes that are actually collected at the municipal level, the paper finds that as the compensation tax collectors receive goes up, they collect more in taxes. This relationship is however true only for collectors who are compensated on a commission basis and not for collectors compensated on the basis of a flat salary.

Corresponding author: Sutirtha Bagchi, Department of Economics, Villanova University, Villanova, PA, USA, E-mail:


I thank Gerald Cross of the Pennsylvania Economy League for sharing survey data on compensation of tax collectors, Sharon Bogden of the Department of General Services of Pennsylvania and Rhonda R. Newton of the Pennsylvania Heritage Foundation for help in obtaining issues of the Pennsylvania Manual, Joan Youngman of the Lincoln Institute of Land Policy for providing data on escrow, and Maya Grimm, Lily Murray, and Jyotasna Yadav for research assistance. I also thank (without implicating) Nathan Anderson, Sebastien Bradley, Suzanne Clain, Joshua Hall, Andrew Hayashi, Björn Kauder, Christopher Kilby, Xiaoxiao Li, Mario Macis, Scott Masten, Paul Oyer, Justin Ross, Jagadeesh Sivadasan, and Jeffrey Wooldridge along with seminar participants at the University of Michigan, the American Economic Association Annual Meeting, the International Institute of Public Finance Annual Congress, the National Tax Association Conference, and the Society of Labor Economists Annual Meeting for comments. All links were current as of May 6th 2021. Results from additional specifications described in the text but not included in the paper are available in the Online Appendix.


Ariely, D., A. Bracha, and S. Meier. 2009. “Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially.” The American Economic Review 99 (1): 544–55. in Google Scholar

Barro, R. 1973. “The Control of Politicians: An Economic Model.” Public Choice 14: 19–42. in Google Scholar

Becker, G. S., and G. J. Stigler. 1974. “Law Enforcement, Malfeasance, and Compensation of Enforcers.” The Journal of Legal Studies 3 (1): 1–18. in Google Scholar

Besley, T. 2004. “Paying Politicians: Theory and Evidence.” Journal of the European Economic Association 2 (2-3): 193–215. in Google Scholar

Besley, T., and S. Coate. 2003. “Elected versus Appointed Regulators: Theory and Evidence.” Journal of the European Economic Association 1 (5): 1176–206. in Google Scholar

Braendle, T. 2015. “Does Remuneration Affect the Discipline and the Selection of Politicians? Evidence from Pay Harmonization in the European Parliament.” Public Choice 162 (1-2): 1–24. in Google Scholar

Brennan, G., and J. M. Buchanan. 1980. The Power to Tax. Cambridge: Cambridge University Press.Search in Google Scholar

Di Tella, R., and Fisman, R. 2004. “Are Politicians Really Paid like Bureaucrats?” The Journal of Law and Economics 47 (2): 477–513. in Google Scholar

Ferejohn, J. 1986. “Incumbent Performance and Electoral Control.” Public Choice 50 (1-3): 5–25. in Google Scholar

Ferraz, C., and F. Finan, “Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance,” In Working Paper, 2011.10.3386/w14906Search in Google Scholar

Ferry, J. 1991. Changes Planned for Tax Office. Philadelphia, PA: Philadelphia Inquirer.Search in Google Scholar

Fisman, R., N. Harmon, E. Kamenica, and I. Munk. 2015. “Labor Supply of Politicians.” Journal of the European Economic Association 13 (5): 871–905. in Google Scholar

Gagliarducci, S., and T. Nannicini. 2013. “Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection.” Journal of the European Economic Association 11 (2): 369–98. in Google Scholar

Gneezy, U., and A. Rustichini. 2000. “Pay Enough or Don’t Pay at All.” Quarterly Journal of Economics 115 (3): 791–810. in Google Scholar

Hayashi, A. T. 2014. “The Legal Salience of Taxation.” University of Chicago Law Review 81 (4): 1443–507.10.2139/ssrn.2151867Search in Google Scholar

Holmstrom, B., and P. Milgrom. 1991. “Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design.” Journal of Law, Economics, and Organization 7 (Special Issue): 24–52. in Google Scholar

Khan, A. Q., A. I. Khwaja, and B. A. Olken. 2016. “Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors.” Quarterly Journal of Economics 131 (1): 219–71. in Google Scholar

Legislative Budget and Finance Committee. 2011. Pennsylvania’s Current Real Property Tax Collection System. in Google Scholar

Makowsky, M., and S. Sanders. 2013. “Political Costs and Fiscal Benefits: The Political Economy of Residential Property Value Assessment under Proposition 212$2\frac{1}{2}$.” Economics Letters 120 (3): 359–63. in Google Scholar

Mikesell, J. L., and C. Liu. 2011. “Property Tax Stability: A Tax System Model of Base and Revenue Dynamics through the Great Recession and Beyond.” Public Finance and Management 13 (4): 310–34.Search in Google Scholar

Mocan, N. H., and D. T. Altindag. 2013. “Salaries and Work Effort: An Analysis of the European Union Parliamentarians.” Economic Journal 123 (573): 1130–67. in Google Scholar

Parrillo, N. R. 2013. Against the Profit Motive: The Salary Revolution in American Government, 1780–1940. New Haven, CT: Yale University Press.10.12987/yale/9780300176582.001.0001Search in Google Scholar

Ross, M. J. 2011. “Assessor Incentives and Property Assessment.” Southern Economic Journal 77 (3): 776–94. in Google Scholar

Shapiro, C., and J. Stiglitz. 1984. “Equilibrium Unemployment as a Worker Discipline Device.” The American Economic Review 74 (3): 433–44.10.1017/CBO9780511559594.004Search in Google Scholar

Stone, W. J., S. A. Fulton, C. D. Maestas, and L. Sandy Maisel. 2010. “Incumbency Reconsidered: Prospects, Strategic Retirement, and Incumbent Quality in U.S. House Elections.” The Journal of Politics 72 (1): 178–90. in Google Scholar

Whalley, A. 2013. “Elected versus Appointed Policy Makers: Evidence from City Treasurers.” The Journal of Law and Economics 56 (1): 39–81. in Google Scholar

White, E. N. 2004. “From Privatized to Government-Administered Tax Collection: Tax Farming in Eighteenth-Century France.” The Economic History Review 57 (4): 636–63. in Google Scholar

Wooldridge, J. M. 2002. Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press.Search in Google Scholar

Zelle, K. 2019. “Part-Time Government.” Ohio State Law Journal 80 (5): 987–1053.Search in Google Scholar

Supplementary Material

The online version of this article offers supplementary material (

Received: 2020-01-10
Revised: 2021-05-07
Accepted: 2021-05-07
Published Online: 2021-06-09

© 2021 Walter de Gruyter GmbH, Berlin/Boston

Downloaded on 3.12.2022 from
Scroll Up Arrow