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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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number
1411.
Find related papers by JEL classification: B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian O1 - Economic Development, Technological Change, and Growth - - Economic Development
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