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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 frame work 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 William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp792.

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Length: pages
Date of creation: 01 Sep 2005
Date of revision:
Handle: RePEc:wdi:papers:2005-792

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Keywords: Corruption; bribery; institutions; governance.;

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References

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Citations

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Cited by:
  1. Jennifer Hunt, 2006. "How Corruption Hits People When They Are Down," NBER Working Papers 12490, National Bureau of Economic Research, Inc.
  2. 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.
  3. Zvika Neeman & Daniele Paserman & Avi Simhon, 2006. "Corruption and Openness," 2006 Meeting Papers 164, Society for Economic Dynamics.
  4. Keith Blackburn & Gonzalo F. Forgues-Puccio, 2008. "Financial Liberalisation, Bureaucratic Corruption and Economic Development," Development Research Working Paper Series 06/2008, Institute for Advanced Development Studies.
  5. Chongwoo Choe & Ratbek Dzhumashev & Asadul Islam & Zakir H. Khan, 2011. "Corruption and Network in Education: Evidence from the Household Survey Data in Bangladesh," Monash Economics Working Papers 08-11, Monash University, Department of Economics.
  6. Lavallée, Emmanuelle & Razafindrakoto, Mireille & Roubaud, François, 2010. "Ce qui engendre la corruption : une analyse microéconomique sur données africaines," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/223, Université Paris-Dauphine.
  7. Jennifer Hunt, 2005. "Why Are Some Public Officials more Corrupt Than Others?," NBER Working Papers 11595, National Bureau of Economic Research, Inc.

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