Advanced Search
MyIDEAS: Login to save this paper or follow this series

Human capital and corruption: a microeconomic model of the bribes market with democratic contestability

Contents:

Author Info

  • Pedro Cosme Costa Vieira

    ()
    (Faculdade de Economia, Universidade do Porto)

  • Aurora A.C. Teixeira

    ()
    (CEMPRE, Faculdade de Economia, Universidade do Porto)

Abstract

To overcome market failures society creates common laws that stimulate or penalize individual actions, the enforcement of which depends on the actions of public authorities who may be susceptible to corruption. Thus, a new market emerges where ‘influences’ are traded. Legislators have incentives to deviate from the goal of efficiency and produce laws that maximize the gains that can be expected from bribes. We model this behaviour for an autocracy versus a democracy, using a microeconomic framework. We assume that in an autocracy rulers have a monopoly over the bribes market, whereas in a democracy conflicting groups compete in the bribes market. In order to bring about the downfall of the incumbent rulers, these groups inform voters of the rulers' deviant actions so that, by a stochastic process, they convince voters of the existence of bribes and therefore gain their votes. The models constructed produce results that are compatible with the well-known stylized facts, namely that (1) in a democracy the level of corruption is lower than in an autocracy, although still positive, that (2) in environments where the level of human capital is higher (the proxy for the voters’ receptivity to the efforts of the opposition), regimes are closer to democracies and the level of corruption is lower, and that (3) the level of corruption is higher in more regulated economies.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.fep.up.pt/investigacao/workingpapers/06.05.16_WP212_vieirateixeira.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 212.

as in new window
Length: 14 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:por:fepwps:212

Contact details of provider:
Postal: Rua Dr. Roberto Frias, 4200 PORTO
Phone: 351-22-5571100
Fax: 351-22-5505050
Email:
Web page: http://www.fep.up.pt/
More information through EDIRC

Related research

Keywords: Human capital; corruption; democracy; computational models;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Alberto Ades & Rafael Di Tella, 1997. "The New Economics of Corruption: a Survey and Some New Results," Political Studies, Political Studies Association, vol. 45(3), pages 496-515.
  2. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
  3. Rose-Ackerman, Susan, 2002. ""Grand" corruption and the ethics of global business," Journal of Banking & Finance, Elsevier, vol. 26(9), pages 1889-1918, September.
  4. Gibbons, Michael & Johnston, Ron, 1974. "The roles of science in technological innovation," Research Policy, Elsevier, vol. 3(3), pages 220-242, November.
  5. Rajeev K. Goel & Michael A. Nelson, 2005. "Economic Freedom Versus Political Freedom: Cross-Country Influences On Corruption ," Australian Economic Papers, Wiley Blackwell, vol. 44(2), pages 121-133, 06.
  6. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
  7. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
  8. Xiaohui Xin & Thomas K. Rudel, 2004. "The Context for Political Corruption: A Cross-National Analysis," Social Science Quarterly, Southwestern Social Science Association, vol. 85(2), pages 294-309.
  9. Robert J. Barro, 1994. "Democracy & Growth," NBER Working Papers 4909, National Bureau of Economic Research, Inc.
  10. Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
  11. Fisman, Raymond & Svensson, Jakob, 2000. "Are corruption and taxation really harmful to growth? - firm-level evidence," Policy Research Working Paper Series 2485, The World Bank.
  12. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
  13. Barreto, Raul A., 2000. "Endogenous corruption in a neoclassical growth model," European Economic Review, Elsevier, vol. 44(1), pages 35-60, January.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:por:fepwps:212. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.