Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82124
Authors: 
Alt, James E.
Dreyer Lassen, David
Year of Publication: 
2008
Series/Report no.: 
EPRU Working Paper Series 2008-02
Abstract: 
High-quality data on state-level inequality and incomes, panel data on corruption convictions, and careful attention to the consequences of including or excluding fixed effects in the panel specification allow us to estimate the impact of income considerations on the decision to undertake corrupt acts. Following efficiency wage arguments, for a given institutional environment the corruptible employee’s or official’s decision to engage in corruption is affected by relative wages and expected tenure in the public sector, the probability of detection, the cost of fines and jail terms, and the degree of inequality, which indicate diminished prospects facing those convicted of corruption. In US states over 25 years we show that inequality and higher government relative wages significantly and robustly produce less corruption. This reverses other findings of a positive association between inequality and corruption, which we show arises from long-run joint causation by unobserved factors.
Subjects: 
corruption
rent seeking
inequality
Gini coefficient
efficiency wage
public sector wages
JEL: 
D72
D73
P48
Document Type: 
Working Paper

Files in This Item:
File
Size
512.75 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.