Wage Determination in the Federal Government: The Role of Constituents and Bureaucrats

Abstract

The existence of significant wage differentials among "similar" individuals employed by different agencies in the federal government is explored. The theoretical framework proposes that the underlying reason for these differentials may be linked to the political influence exhibited by the constituencies and bureaucracies of federal agencies. The empirical results indicate that employees in federal agencies with small and well-organized constituencies and with bureaucracies that apparently share common interests generally receive higher wage rates. In fact, a small number of variables measuring these political factors explains about two-thirds of interagency wage differentials.