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Corruption and Social Interaction: Evidence from China

Author

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  • Bin Dong

    (The School of Economics and Finance, Queensland University of Technology)

  • Benno Torgler

    (The School of Economics and Finance, Queensland University of Technology, CREMA – Centre for Research in Economics, Management and the Arts and CESifo)

Abstract

We explore theoretically and empirically whether social interaction, including local and global interaction, influences the incidence of corruption. We first present an interaction-based model on corruption that predicts that the level of corruption is positively associated with social interaction. Then we empirically verify the theoretical prediction using within-country evidence at the province-level in China during 1998 to 2007. Panel data evidence clearly indicates that social interaction has a statistically significantly positive effect on the corruption rate in China. Our findings, therefore, underscore the relevance of social interaction in understanding corruption.

Suggested Citation

  • Bin Dong & Benno Torgler, 2011. "Corruption and Social Interaction: Evidence from China," Working Papers 2011.09, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2011.09
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    3. Qu, Guangjun & Sylwester, Kevin & Wang, Feng, 2016. "Anticorruption and Growth: Evidence from China," MPRA Paper 72190, University Library of Munich, Germany.
    4. Qu, Guangjun & Sylwester, Kevin & Wang, Feng, 2018. "Anticorruption and growth: Evidence from China," European Journal of Political Economy, Elsevier, vol. 55(C), pages 373-390.
    5. González-Fernández, Marcos & González-Velasco, Carmen, 2014. "Shadow economy, corruption and public debt in Spain," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 1101-1117.
    6. Borsky, Stefan & Kalkschmied, Katja, 2019. "Corruption in space: A closer look at the world's subnations," European Journal of Political Economy, Elsevier, vol. 59(C), pages 400-422.
    7. Günther G. Schulze & Bambang Suharnoko Sjahrir & Nikita Zakharov, 2016. "Corruption in Russia," Journal of Law and Economics, University of Chicago Press, vol. 59(1), pages 135-171.
    8. Chen, Jianxun & Zhan, Wu & Tong, Zhaodi & Kumar, Vikas, 2020. "The effect of inward FDI on outward FDI over time in China: A contingent and dynamic perspective," International Business Review, Elsevier, vol. 29(5).
    9. López-Valcárcel, Beatriz G. & Jiménez, Juan Luis & Perdiguero, Jordi, 2017. "Danger: Local corruption is contagious!," Journal of Policy Modeling, Elsevier, vol. 39(5), pages 790-808.
    10. Daniel Gingerich & Virginia Oliveros & Ana Corbacho & Mauricio Ruiz-Vega, 2015. "Corruption as a Self-Fulfilling Prophecy: Evidence from a Survey Experiment in Costa Rica," IDB Publications (Working Papers) 88334, Inter-American Development Bank.
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    More about this item

    Keywords

    Corruption; Social Interaction; China;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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