The Impact of an Unexpected Wage Cut on Corruption: Evidence from a "Xeroxed" Exam
AbstractThis paper aims to understand how corruption responds to financial incentives and, in particular, it is an attempt to identify the causal impact of a wage loss on the prevalence of corruption in the education sector. Specifically, we exploit the unexpected wage cut in May 2010 that affected all Romanian public sector employees, including the public education staff, and examine its effect on students’ scores on the high-stakes national exam which occurs at the end of high school—the Baccalaureate. To exploit the effect of an income shock on corruption, we use a difference-in-difference strategy and compare the change in the exam outcomes between the public schools—the treatment group—and the private schools—the control group, which were unaffected by the wage cut. Our findings suggest that the wage loss led the public schools to have better exam outcomes than the private schools in 2010 relative to 2009. We attribute this difference to the increased involvement in corrupt activities by public school staff, which was driven by financial incentives. These results match an unprecedentedly high number of allegations of fraud and bribery against school principals, which earned the 2010 Baccalaureate the title of the Xeroxed exam—akin to identical test answers found to have been distributed to numerous students.
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Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 535.
Length: 36 pages
Date of creation: 20 Jun 2012
Date of revision:
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Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
school principles; bribes; high-stakes tests;
Other versions of this item:
- Borcan, Oana & Lindahl, Mikael & Mitrut, Andreea, 2012. "The Impact of an Unexpected Wage Cut on Corruption: Evidence from a “Xeroxed” Exam," Working Paper Series, Center for Labor Studies 2012:14, Uppsala University, Department of Economics.
- Oana Borcan & Mikael Lindahl & Andreea Mitrut, 2012. "The Impact of an Unexpected Wage Cut on Corruption: Evidence from a "Xeroxed" Exam," CESifo Working Paper Series 4038, CESifo Group Munich.
- Borcan, Oana & Lindahl, Mikael & Mitrut, Andreea, 2012. "The Impact of an Unexpected Wage Cut on Corruption: Evidence from a "Xeroxed" Exam," IZA Discussion Papers 6646, Institute for the Study of Labor (IZA).
- H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
- I20 - Health, Education, and Welfare - - Education - - - General
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-EDU-2012-06-25 (Education)
- NEP-LAB-2012-06-25 (Labour Economics)
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.:
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Corruption and wages of public officials
by Economic Logician in Economic Logic on 2012-07-12 14:15:00
- Reducerea cu 25% a salariilor ?i notele de la Bac
by Alina Botezat in Alina Botezat Blog on 2012-10-09 11:47:00
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