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Obtaining a Driver's License in India: An Experimental Approach to Studying Corruption

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  • Marianne Bertrand

    (University of Chicago Graduate School of Business, National Bureau of Economic Research Center for Economic and Policy Research, and Institute for the Study of Labor)

  • Simeon Djankov

    (International Finance Corporation)

  • Rema Hanna

    (New York University Wagner School of Public Service)

  • Sendhil Mullainathan

    (Harvard University and National Bureau of Economic Research)

Abstract

We study the allocation of driver's licenses in India by randomly assigning applicants to one of three groups: bonus (offered a bonus for obtaining a license quickly), lesson (offered free driving lessons), or comparison. Both the bonus and lesson groups are more likely to obtain licenses. However, bonus group members are more likely to make extralegal payments and to obtain licenses without knowing how to drive. All extralegal payments happen through private intermediaries ("agents"). An audit study of agents reveals that they can circumvent procedures such as the driving test. Overall, our results support the view that corruption does not merely reflect transfers from citizens to bureaucrats but distorts allocation. (c) 2007 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

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Bibliographic Info

Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 122 (2007)
Issue (Month): 4 (November)
Pages: 1639-1676

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Handle: RePEc:tpr:qjecon:v:122:y:2007:i:4:p:1639-1676

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  1. Svensson, Jakob, 2002. "Who Must Pay Bribes and How Much? Evidence from a cross-section of firms," Seminar Papers 713, Stockholm University, Institute for International Economic Studies.
  2. Benjamin A. Olken, 2005. "Monitoring Corruption: Evidence from a Field Experiment in Indonesia," NBER Working Papers 11753, National Bureau of Economic Research, Inc.
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  4. Djankov, Simeon & La Porta, Rafael & Shleifer, Andrei & Lopez de Silanes, Florencio, 2001. "The regulation of entry," Policy Research Working Paper Series 2661, The World Bank.
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  7. Tirole, Jean, 1991. "Collusion and the Theory of Organizations," IDEI Working Papers 9, Institut d'Économie Industrielle (IDEI), Toulouse.
  8. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  9. Ritva Reinikka & Jakob Svensson, 2005. "Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 259-267, 04/05.
  10. Banerjee, A.V., 1997. "A Theory of Misgovernance," Working papers 97-4, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Di Tella, Rafael & Schargrodsky, Ernesto, 2003. "The Role of Wages and Auditing during a Crackdown on Corruption in the City of Buenos Aires," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 269-92, April.
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