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Bribery: Who Pays, Who Refuses, What are the Payoffs?

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Author Info
Hunt, Jennifer
Laszlo, Sonia

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Abstract

We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the payoffs to the client's decision. We test this framework using a new data set on bribery of Peruvian public officials by households. The theory predicts that bribery is more attractive to both parties when the client is richer, and we find empirically that both bribery incidence and value are increasing in household income. However, 65% of the relation between bribery incidence and income is explained by greater use of officials by high-income households, and by their use of more corrupt types of official. Compared to a client dealing with an honest official, a client who pays a bribe has a similar probability of concluding her business, while a client who refuses to bribe has a probability 16 percentage points lower. This indicates that service improvements in response to a bribe merely offset service reductions associated with angling for a bribe, and that clients refusing to bribe are punished. We use these and other results to argue that bribery is not a regressive tax.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5251.

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Date of creation: Sep 2005
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Handle: RePEc:cpr:ceprdp:5251

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Related research
Keywords: corruption; governance; institutions;

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Find related papers by JEL classification:
H4 - Public Economics - - Publicly Provided Goods
K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
O1 - Economic Development, Technological Change, and Growth - - Economic Development

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jennifer Hunt, 2006. "How Corruption Hits People When They Are Down," NBER Working Papers 12490, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. B. Burcin Yurtoglu & Christine Zulehner, 2007. "The gender wage gap in top corporate jobs is still there," Vienna Economics Papers 0701, University of Vienna, Department of Economics. [Downloadable!]
  3. Jennifer Hunt, 2005. "Why Are Some Public Officials more Corrupt Than Others?," NBER Working Papers 11595, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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