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Public Sector Size and Corruption: Evidence from 290 Swedish Municipalities

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Author Info

  • Bergh, Andreas

    ()
    (Research Institute of Industrial Economics (IFN))

  • Fink, Günther

    (Harvard School of Public Health)

  • Öhrvall, Richard

    (Linnaeus University)

Abstract

In this paper, we use data from a corruption survey conducted among top politicians and high level civil servants in 290 Swedish municipalities in 2007 to investigate the effects of government size on corruption. We construct several measures of corruption based on the survey, and combine these corruption measures with detailed administrative municipality level data to estimate the effect of local government resources on corruption. In cross-sectional analysis, we find a robust and negative association between total public expenditure and corruption. When we use lagged population growth rates and age structure as instruments for expenditure in 2-stage-least-squares regressions, the point estimates remain negative, but are no longer significant. In contrast with standard political economy models, where a bigger public sector is typically assumed to cause problems with corruption and public office abuse, our results suggest that corruption pressures may be particularly high when government resources are limited.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 938.

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Length: 31 pages
Date of creation: 12 Nov 2012
Date of revision:
Handle: RePEc:hhs:iuiwop:0938

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Related research

Keywords: Corruption; Government size; Local politi;

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References

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  1. Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, . "The Quality of Government," Working Paper 19452, Harvard University OpenScholar.
  2. Pellegrini, L. & Gerlagh, R., 2008. "Causes of corruption: A survey of cross-country analyses and extended results," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3763893, Tilburg University.
  3. Rajeev Goel & Michael Nelson, 2011. "Measures of corruption and determinants of US corruption," Economics of Governance, Springer, vol. 12(2), pages 155-176, June.
  4. Angeletos, George-Marios & Alesina, Alberto, 2005. "Fairness and Redistribution," Scholarly Articles 4553009, Harvard University Department of Economics.
  5. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, vol. 90(1), pages 194-211, March.
  6. Goel, Rajeev K & Nelson, Michael A, 1998. " Corruption and Government Size: A Disaggregated Analysis," Public Choice, Springer, vol. 97(1-2), pages 107-20, October.
  7. Joshua Angrist & Alan B. Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," NBER Working Papers 8456, National Bureau of Economic Research, Inc.
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