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The Transition of Corruption: From Poverty to Honesty

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  • Erich Gundlach
  • Martin Paldam

Abstract

Measures of corruption and income are highly correlated across countries. We use prehistoric measures of biogeography as instruments for modern income levels to identify an exogenous long-run income effect. We find that our corruption-free incomes explain the cross-country pattern of corruption just as well as actual incomes. This result suggests that the long-run causality is exclusively from income to corruption. As countries get rich, corruption vanishes and there is a transition of corruption from poverty to honesty

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1411.

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Length: 8 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:kie:kieliw:1411

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Keywords: Long-run growth; Corruption; Biogeography;

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  1. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, World Bank Group, vol. 10(3), pages 565-91, September.
  2. Martin Paldam & Erich Gundlach, 2007. "Two Views on Institutions and Development: The Grand Transition vs. the Primacy of Institutions," Kiel Working Papers 1315, Kiel Institute for the World Economy.
  3. Erich Gundlach & Martin Paldam, 2008. "The Democratic Transition. A study of the causality between income and the Gastil democracy index," Economics Working Papers, School of Economics and Management, University of Aarhus 2008-15, School of Economics and Management, University of Aarhus.
  4. Galor, Oded, 2004. "From Stagnation to Growth: Unified Growth Theory," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4581, C.E.P.R. Discussion Papers.
  5. Lambsdorff,Johann Graf, 2007. "The Institutional Economics of Corruption and Reform," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521872751.
  6. Gundlach, Erich & Paldam, Martin, 2009. "A farewell to critical junctures: Sorting out long-run causality of income and democracy," European Journal of Political Economy, Elsevier, Elsevier, vol. 25(3), pages 340-354, September.
  7. Paldam, Martin, 2001. "Corruption and Religion Adding to the Economic Model," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 54(2-3), pages 383-413.
  8. Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, . "The Quality of Government," Working Paper 19452, Harvard University OpenScholar.
  9. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World
    [A Farewell to Alms: A Brief Economic History of the World]
    ," Introductory Chapters, Princeton University Press, Princeton University Press.
  10. Olsson, Ola & Hibbs, Douglas Jr., 2005. "Biogeography and long-run economic development," European Economic Review, Elsevier, Elsevier, vol. 49(4), pages 909-938, May.
  11. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, Elsevier, vol. 76(3), pages 399-457, June.
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