Are Public Sector CEOs Different?Leadership Wages and Performance in Schools

This paper uses a unique data set to investigate the link betweenthe pay and performance of school principals. It is frequently arguedthat public sector CEOs are paid like bureaucrats with little rewardfor good performance. However, this ignores the possibility of implicitlabor market incentives. We show that pay is indeed linked to pub-licly observable performance measures. Moreover poorly performingprincipals face a higher chance of being replaced. These …ndings forthe public sector parallel what has been found by looking at the payand performance of private sector CEOs.[...]