Bribery: Who Pays, Who Refuses, What Are The Payoffs?
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.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.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.Length: pages
Date of creation: 01 Sep 2005
Date of revision:
Handle: RePEc:wdi:papers:2005-792
Contact details of provider:
Postal: 724 E. University Ave, Wyly Hall 1st Flr, Ann Arbor MI 48109
Phone: 734 763-5020
Fax: 734 763 5850
Email:
Web page: http://www.wdi.umich.edu
More information through EDIRC
Related research
Keywords: Corruption; bribery; institutions; governance.;Other versions of this item:
- Jennifer Hunt & Sonia Laszlo, 2005. "Bribery: Who Pays, Who Refuses, What Are the Payoffs?," NBER Working Papers 11635, National Bureau of Economic Research, Inc.
- Hunt, Jennifer & Laszlo, Sonia, 2005. "Bribery: Who Pays, Who Refuses, What are the Payoffs?," CEPR Discussion Papers 5251, C.E.P.R. Discussion Papers.
- Jennifer Hunt & Sonia Laszlo, 2006. "Bribery: Who Pays, Who Refuses, What Are The Payoffs?," Departmental Working Papers 2006-06, McGill University, Department of Economics.
- H4 - Public Economics - - Publicly Provided Goods
- K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-10 (All new papers)
- NEP-DEV-2006-06-10 (Development)
- NEP-LAW-2006-06-10 (Law & Economics)
- NEP-PBE-2006-06-10 (Public Economics)
- NEP-REG-2006-06-10 (Regulation)
References
References listed on IDEASPlease 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.:
- Brown, James N & Light, Audrey, 1992. "Interpreting Panel Data on Job Tenure," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 219-57, July.
- Cadot, Olivier, 1987. "Corruption as a gamble," Journal of Public Economics, Elsevier, vol. 33(2), pages 223-244, July.
- McMillan, John & Zoido, Pablo, 2004.
"How to Subvert Democracy: Montesinos in Peru,"
Research Papers
1851r, Stanford University, Graduate School of Business.
- John Mcmillan & Pablo Zoido, 2004. "How to Subvert Democracy: Montesinos in Peru," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 69-92, Fall.
- John McMillan & Pablo Zoido, 2004. "How to Subvert Democracy: Montesinos in Peru," CESifo Working Paper Series 1173, CESifo Group Munich.
- McMillan, John & Zoido, Paolo, 2004. "How to Subvert Democracy: Montesinos in Peru," CEPR Discussion Papers 4361, C.E.P.R. Discussion Papers.
- John McMillan & Pablo Zoido, 2004. "How to Subvert Democracy: Montesinos in Peru," Discussion Papers 03-030, Stanford Institute for Economic Policy Research.
- Svensson, Jakob, 2002.
"Who Must Pay Bribes and How Much? Evidence from a cross-section of firms,"
Seminar Papers
713, Stockholm University, Institute for International Economic Studies.
- Jakob Svensson, 2003. "Who Must Pay Bribes And How Much? Evidence From A Cross Section Of Firms," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 207-230, February.
- Svensson, Jakob, 2000. "Who must pay bribes and how much? Evidence from a cross-section of firms," Policy Research Working Paper Series 2486, The World Bank.
- Olson, Mancur, Jr & Sarna, Naveen & Swamy, Anand V, 2000. " Governance and Growth: A Simple Hypothesis Explaining Cross-Country Differences in Productivity Growth," Public Choice, Springer, vol. 102(3-4), pages 341-64, March.
- Kaufman, Daniel & Shang-Jin Wei, 1999.
"Does"grease money"speed up the wheels of commerce?,"
Policy Research Working Paper Series
2254, The World Bank.
- Kaufmann, Daniel & Wei, Shang-Jin, 1999. "Does 'Grease Money' Speed Up the Wheels of Commerce?," MPRA Paper 8209, University Library of Munich, Germany.
- Daniel Kaufmann & Shang-Jin Wei, 1999. "Does "Grease Money" Speed Up the Wheels of Commerce?," NBER Working Papers 7093, National Bureau of Economic Research, Inc.
- Daniel Kaufmann & Shang-Jin Wei, 2000. "Does 'Grease Money' Speed Up the Wheels of Commerce?," IMF Working Papers 00/64, International Monetary Fund.
- Farber, Henry S & Gibbons, Robert, 1996. "Learning and Wage Dynamics," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1007-47, November.
- Fisman, Raymond & Gatti, Roberta, 2000.
"Decentralization and corruption - evidence across countries,"
Policy Research Working Paper Series
2290, The World Bank.
- Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
- Mookherjee, Dilip & Png, I P L, 1995. "Corruptible Law Enforcers: How Should They Be Compensated?," Economic Journal, Royal Economic Society, vol. 105(428), pages 145-59, January.
- Beaudry, Paul & DiNardo, John, 1991. "The Effect of Implicit Contracts on the Movement of Wages over the Business Cycle: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 665-88, August.
- Joseph G. Altonji & Charles R. Pierret, 1997.
"Employer Learning and Statistical Discrimination,"
NBER Working Papers
6279, National Bureau of Economic Research, Inc.
- Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning And Statistical Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 313-350, February.
- Joseph G. Altonji & Charles R. Pierret, 1997. "Employer learning and statistical discrimination," Working Paper Series, Macroeconomic Issues WP-97-11, Federal Reserve Bank of Chicago.
- Joseph G. Altonji & Charles R. Pierret, . "Employer Learning and Statistical Discrimination," IPR working papers 97-18, Institute for Policy Resarch at Northwestern University.
- Anand Swamy & Stephen Knack & Young Lee & Omar Azfar, 2000.
"Gender and Corruption,"
Center for Development Economics
158, Department of Economics, Williams College.
- Swamy, Anand & Knack, Stephen & Lee, Young & Azfar, Omar, 2001. "Gender and corruption," Journal of Development Economics, Elsevier, vol. 64(1), pages 25-55, February.
- Anand V. Swamy & Stephen Knack & Young Lee & Omar Azfar, 2000. "Gender and Corruption," Department of Economics Working Papers 2000-10, Department of Economics, Williams College.
- Jennifer Hunt, 2004.
"Trust and Bribery: The Role of the Quid Pro Quo and the Link with Crime,"
NBER Working Papers
10510, National Bureau of Economic Research, Inc.
- Hunt, Jennifer, 2004. "Trust and Bribery: The Role of the Quid Pro Quo and the Link with Crime," IZA Discussion Papers 1179, Institute for the Study of Labor (IZA).
- Hunt, Jennifer, 2004. "Trust and Bribery: The Role of the Quid Pro Quo and the Link With Crime," CEPR Discussion Papers 4567, C.E.P.R. Discussion Papers.
- Raaj Sah, 2005.
"Corruption Across Countries and Regions: Some Consequences of Local Osmosis,"
Working Papers
10-2005, Singapore Management University, School of Economics.
- Sah, Raaj, 2007. "Corruption across countries and regions: Some consequences of local osmosis," Journal of Economic Dynamics and Control, Elsevier, vol. 31(8), pages 2573-2598, August.
- Sah, R.K., 1988. "Persistence And Pervasiveness Of Corruption: New Perspectives," Papers 560, Yale - Economic Growth Center.
- Raaj Sah, 2006. "Corruption Across Countries and Regions: Some Consequences of Local Osmosis," Working Papers 0609, Harris School of Public Policy Studies, University of Chicago.
- Banerjee, A.V., 1997. "A Theory of Misgovernance," Working papers 97-4, Massachusetts Institute of Technology (MIT), Department of Economics.
- Jay Pil Choi & Marcel Thum, 2004.
"The Economics of Repeated Extortion,"
RAND Journal of Economics,
The RAND Corporation, vol. 35(2), pages 203-223, Summer.
- Choi, Jay Pil & Thum, Marcel, 2003. "The economics of repeated extortion," Dresden Discussion Paper Series in Economics 13/03, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
- Robert Gibbons & Lawrence F. Katz & Thomas Lemieux & Daniel Parent, 2005.
"Comparative Advantage, Learning, and Sectoral Wage Determination,"
Journal of Labor Economics,
University of Chicago Press, vol. 23(4), pages 681-724, October.
- Robert Gibbons & Lawrence F. Katz & Thomas Lemieux & Daniel Parent, 2002. "Comparative Advantage, Learning, and Sectoral Wage Determination," CIRANO Working Papers 2002s-35, CIRANO.
- Robert Gibbons & Lawrence F. Katz & Thomas Lemieux & Daniel Parent, 2002. "Comparative Advantage, Learning, and Sectoral Wage Determination," NBER Working Papers 8889, National Bureau of Economic Research, Inc.
- Katz, Lawrence & Gibbons, Robert & Lemieux, Thomas & Parent, Daniel, 2005. "Comparative Advantage, Learning, and Sectoral Wage Determination," Scholarly Articles 2766651, Harvard University Department of Economics.
- Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-81, August.
- Andvig, J.C. & Ove Moene, K., 1988.
"How Corruption May Corrupt,"
Memorandum
20/1988, Oslo University, Department of Economics.
- Andvig, Jens Chr. & Moene, Karl Ove, 1990. "How corruption may corrupt," Journal of Economic Behavior & Organization, Elsevier, vol. 13(1), pages 63-76, January.
- Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
- Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
- Jennifer Hunt, 2005.
"Why Are Some Public Officials more Corrupt Than Others?,"
NBER Working Papers
11595, National Bureau of Economic Research, Inc.
- Jennifer Hunt, 2005. "Why Are Some Public Officials More Corrupt Than Others?," William Davidson Institute Working Papers Series wp790, William Davidson Institute at the University of Michigan.
- Hunt, Jennifer, 2005. "Why Are Some Public Officials More Corrupt Than Others?," CEPR Discussion Papers 5252, C.E.P.R. Discussion Papers.
- Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
- Sanjeev Gupta & Hamid Davoodi & Rosa Alonso-Terme, 2002. "Does corruption affect income inequality and poverty?," Economics of Governance, Springer, vol. 3(1), pages 23-45, 03.
- Deininger, Klaus & Mpuga, Paul, 2005. "Does Greater Accountability Improve the Quality of Public Service Delivery? Evidence from Uganda," World Development, Elsevier, vol. 33(1), pages 171-191, January.
- Di Tella, Rafael & Schargrodsky, Ernesto, 2003. "The Role of Wages and Auditing during a Crackdown on Corruption in the City of Buenos Aires," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 269-92, April.
- Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July.
- Freeman, Richard B, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 643-73, June.
- Lemieux, Thomas, 1998. "Estimating the Effects of Unions on Wage Inequality in a Panel Data Model with Comparative Advantage and Nonrandom Selection," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 261-91, April.
- Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
- Canice Prendergast, 2001. "Selection and Oversight in the Public Sector, With the Los Angeles Police Department as an Example," NBER Working Papers 8664, National Bureau of Economic Research, Inc.
- Banerjee, Abhijit V, 1997. "A Theory of Misgovernance," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1289-1332, November.
- Rose-Ackerman, Susan, 1975. "The economics of corruption," Journal of Public Economics, Elsevier, vol. 4(2), pages 187-203, February.
Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Jennifer Hunt, 2006.
"How Corruption Hits People When They Are Down,"
NBER Working Papers
12490, National Bureau of Economic Research, Inc.
- Hunt, Jennifer, 2007. "How corruption hits people when they are down," Journal of Development Economics, Elsevier, vol. 84(2), pages 574-589, November.
- Jennifer Hunt, 2006. "How Corruption Hits People When They Are Down," Departmental Working Papers 2006-07, McGill University, Department of Economics.
- Jennifer Hunt, 2006. "How Corruption Hits People When They Are Down," William Davidson Institute Working Papers Series wp836, William Davidson Institute at the University of Michigan.
- Hunt, Jennifer, 2006. "How Corruption Hits People When They Are Down," CEPR Discussion Papers 5855, C.E.P.R. Discussion Papers.
- Hunt, Jennifer, 2006. "How Corruption Hits People When They Are Down," IZA Discussion Papers 2278, Institute for the Study of Labor (IZA).
- 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.
- Zvika Neeman & Daniele Paserman & Avi Simhon, 2006.
"Corruption and Openness,"
2006 Meeting Papers
164, Society for Economic Dynamics.
- Zvika Neeman & M. Daniele Paserman & Avi Simhon, 2008. "Corruption and Openness," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 50.
- Zvika Neeman & M. Daniele Paserman & Avi Simhon, 2004. "Corruption and Openness," Discussion Paper Series dp353, The Center for the Study of Rationality, Hebrew University, Jerusalem.
- Neeman, Zvika & Paserman, Daniele & Simhon, Avi, 2003. "Corruption And Openness," Discussion Papers 14977, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
- Neeman, Zvika & Paserman, Marco Daniele & Simhon, Avi, 2003. "Corruption and Openness," CEPR Discussion Papers 4057, C.E.P.R. Discussion Papers.
- 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.
- Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2010. "Financial liberalization, bureaucratic corruption and economic development," Journal of International Money and Finance, Elsevier, vol. 29(7), pages 1321-1339, November.
- 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.
- 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.
- 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.
- Jennifer Hunt, 2005.
"Why Are Some Public Officials more Corrupt Than Others?,"
NBER Working Papers
11595, National Bureau of Economic Research, Inc.
- Jennifer Hunt, 2005. "Why Are Some Public Officials More Corrupt Than Others?," William Davidson Institute Working Papers Series wp790, William Davidson Institute at the University of Michigan.
- Hunt, Jennifer, 2005. "Why Are Some Public Officials More Corrupt Than Others?," CEPR Discussion Papers 5252, C.E.P.R. Discussion Papers.
Lists
This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.Statistics
Access and download statisticsCorrections
When requesting a correction, please mention this item's handle: RePEc:wdi:papers:2005-792For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laurie Gendron).
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.

