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Bribery: Who Pays, Who Refuses, What Are the Payoffs?

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  • Jennifer Hunt
  • Sonia Laszlo

Abstract

We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the payoffs to the client's decision. We test this framework using a new data set on bribery of Peruvian public officials by households. The theory predicts that bribery is more attractive to both parties when the client is richer, and we find empirically that both bribery incidence and value are increasing in household income. However, 65% of the relation between bribery incidence and income is explained by greater use of officials by high-income households, and by their use of more corrupt types of official. Compared to a client dealing with an honest official, a client who pays a bribe has a similar probability of concluding her business, while a client who refuses to bribe has a probability 16 percentage points lower. This indicates that service improvements in response to a bribe merely offset service reductions associated with angling for a bribe, and that clients refusing to bribe are punished. We use these and other results to argue that bribery is not a regressive tax.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11635.

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Date of creation: Sep 2005
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Handle: RePEc:nbr:nberwo:11635

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Citations

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Cited by:
  1. Hunt, Jennifer, 2006. "How Corruption Hits People When They Are Down," CEPR Discussion Papers 5855, C.E.P.R. Discussion Papers.
  2. Jennifer Hunt, 2005. "Why Are Some Public Officials more Corrupt Than Others?," NBER Working Papers 11595, National Bureau of Economic Research, Inc.
  3. Zvika Neeman & Daniele Paserman & Avi Simhon, 2006. "Corruption and Openness," 2006 Meeting Papers 164, Society for Economic Dynamics.
  4. Rodrigues-Neto, José A., 2014. "On corruption, bribes and the exchange of favors," Economic Modelling, Elsevier, vol. 38(C), pages 152-162.
  5. Keith Blackburn & Gonzalo F. Forgues-Puccio, 2005. "Financial Liberalisation, Bureaucratic Corruption and Economic Devlopment," The School of Economics Discussion Paper Series 0531, Economics, The University of Manchester.
  6. Lavallée, Emmanuelle & Roubaud, François, 2009. "Corruption and the informal sector in Sub-Saharan Africa," Economics Papers from University Paris Dauphine 123456789/5135, Paris Dauphine University.
  7. B. Burcin Yurtoglu & Christine Zulehner, 2007. "The gender wage gap in top corporate jobs is still there," Vienna Economics Papers 0701, University of Vienna, Department of Economics.
  8. Hunt, Jennifer & Laszlo, Sonia, 2012. "Is Bribery Really Regressive? Bribery’s Costs, Benefits, and Mechanisms," World Development, Elsevier, vol. 40(2), pages 355-372.
  9. Fabio Mendez & Facundo Sepulveda, 2006. "Optimal Government Regulations and Red Tape in an Economy with Corruption," CEPR Discussion Papers 515, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  10. Mendez, Fabio & Sepulveda, Facundo, 2013. "Optimal Government Regulations And Red Tape In An Economy With Corruption," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(1), pages 51-77, June.
  11. Chongwoo Choe & Ratbek Dzhumashev & Asadul Islam & Zakir H. Khan, 2011. "Corruption and Network in Education: Evidence from the Household Survey Data in Bangladesh," Development Research Unit Working Paper Series 08-11, Monash University, Department of Economics.

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