Raising Wages as a Strategy to Reduce Corruption
AbstractThis paper examines whether raising the salaries of government tax auditors reduces their incentive to accept bribes. It evaluates an optimal tax structure and economic welfare under conditions of perfect and imperfect information in relation to conditions for bribery. The major policy implication of this paper is that it is not necessarily desirable to increase salaries as an anticorruption measure. Even if government can reduce corruption by improving civil servants’ pay, obtaining funds to do so by raising the income tax will worsen economic welfare, based on the optimal tax structure.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 45688.
Date of creation: 21 Oct 2011
Date of revision:
Publication status: Published in Journal of Management and Strategy 4.2(2011): pp. 56-63
Anticorruption; Wages; Optimal Tax; Tax Evasion;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
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- Reinganum, Jennifer F. & Wilde, Louis L., 1985. "Income tax compliance in a principal-agent framework," Journal of Public Economics, Elsevier, vol. 26(1), pages 1-18, February.
- Mookherjee, Dilip & Png, I P L, 1990. "Enforcement Costs and the Optimal Progressivity of Income Taxes," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(2), pages 410-31, Fall.
- Mookherjee, Dilip & Png, Ivan, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 399-415, May.
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