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Social Status and Corruption

Author

Listed:
  • Sebastian Galiani

    (Department of Economics, Washington University in St. Louis, USA.)

  • Federico Weinschelbaum

    (Universidad de San Andrés, Provincia de Buenos Aires, Argentina.)

Abstract

We study the interaction between social and economic incentives in determining the level of corruption. Using social rewards as incentives for civil servants may help to reduce corruption. In our model, a decrease in corruption produces an externality that reduces the cost of hiring civil servants. In particular, it makes wage schemes which avert corruption (efficiency wages) cheaper. We show that the existence of this externality reduces the “optimal” level of corruption in a society, the greater the power of social status, the lower the level of corruption.

Suggested Citation

  • Sebastian Galiani & Federico Weinschelbaum, 2013. "Social Status and Corruption," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 38, pages 1-1.
    • Handle: RePEc:noj:journl:v:38:y:2013:p:1
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    References listed on IDEAS

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    1. Fershtman, Chaim & Weiss, Yoram, 1998. "Social rewards, externalities and stable preferences," Journal of Public Economics, Elsevier, vol. 70(1), pages 53-73, October.
    2. Jean Tirole, 1996. "A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 1-22.
    3. Weiss, Yoram & Fershtman, Chaim, 1998. "Social status and economic performance:: A survey," European Economic Review, Elsevier, vol. 42(3-5), pages 801-820, May.
    4. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-959, July.
    5. Louis Kaplow & Steven Shavell, 2001. "Moral Rules and the Moral Sentiments: Toward a Theory of an Optimal Moral System," NBER Working Papers 8688, National Bureau of Economic Research, Inc.
    6. Emmanuelle Auriol & Régis Renault, 2008. "Status and incentives," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 305-326, March.
    7. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    8. Alan Rousso & Franklin Steves, 2006. "The Effectiveness of Anti-Corruption Programs: Preliminary Evidence from the Post-Communist Transition Countries," Chapters, in: Susan Rose-Ackerman (ed.), International Handbook on the Economics of Corruption, chapter 9, Edward Elgar Publishing.
    9. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    10. Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-141, January.
    11. repec:dau:papers:123456789/12479 is not listed on IDEAS
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    Cited by:

    1. Paul Pelzl & Steven Poelhekke, 2023. "Democratization, leader education and growth: firm-level evidence from Indonesia," Journal of Economic Growth, Springer, vol. 28(4), pages 571-600, December.

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    More about this item

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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