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We examine the effects of increasing bureaucrat salaries, by analyzing
a policy change in India that increased the salaries of a
subset of frontline bureaucrats by 91 percent. Using a difference-indifferences
design, we show that higher salaries (i) had no impact
on performance, (ii) did not affect corrupt or dishonest behavior,
(iii) reduced quit rates by 2.4 percentage points (16 percent) after 2
years, but did not affect the average quality of bureaucrats remaining
in service. Higher salaries marginally increased effort among
bureaucrats who were unhappy about their pay. Expert forecasters
incorrectly predicted that higher salaries would improve bureaucrat
performance and selection.
