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Jobs for Sale: Corruption and Misallocation in Hiring

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  • Jeffrey Weaver

Abstract

Corrupt government hiring is common in developing countries. This paper uses original data to document the operation and consequences of corrupt hiring in a health bureaucracy. Hires pay bribes averaging 17 months of salary, but contrary to conventional wisdom, their observable quality is comparable to counterfactual merit-based hires. Exploiting variation across jobs, I show that the consequences of corrupt allocations depend on the correlation between wealth and quality among applicants: service delivery outcomes are good for jobs where this was positive and poor when negative. In this setting, the correlation was typically positive, leading to relatively good performance of hires.

Suggested Citation

  • Jeffrey Weaver, 2021. "Jobs for Sale: Corruption and Misallocation in Hiring," American Economic Review, American Economic Association, vol. 111(10), pages 3093-3122, October.
    • Handle: RePEc:aea:aecrev:v:111:y:2021:i:10:p:3093-3122
    DOI: 10.1257/aer.20201062
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    Citations

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    Cited by:

    1. Marianne Bertrand & Robin Burgess & Arunish Chawla & Guo Xu, 2020. "The Glittering Prizes: Career Incentives and Bureaucrat Performance," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(2), pages 626-655.
    2. Radoslawa Nikolowa & Daniel Ferreira, 2018. "How to Sell Jobs," Working Papers 846, Queen Mary University of London, School of Economics and Finance.
    3. Callen, Michael & Gulzar, Saad & Hasanain, Ali & Khan, Muhammad Yasir & Rezaee, Arman, 2023. "The political economy of public sector absence," Journal of Public Economics, Elsevier, vol. 218(C).
    4. Davide Viviano, 2019. "Policy Targeting under Network Interference," Papers 1906.10258, arXiv.org, revised Jan 2023.
    5. Pedro Forquesato, 2022. "Who Benefits from Political Connections in Brazilian Municipalities," Papers 2204.09450, arXiv.org.
    6. James Habyarimana & Stuti Khemani & Thiago Scot, 2023. "The importance of political selection for bureaucratic effectiveness," Economica, London School of Economics and Political Science, vol. 90(359), pages 746-779, July.
    7. Klenio Barbosa & Fernando V. Ferreira, 2019. "Occupy Government: Democracy and the Dynamics of Personnel Decisions and Public Sector Performance," NBER Working Papers 25501, National Bureau of Economic Research, Inc.
    8. Deserranno, Erika & León-Ciliotta, Gianmarco, 2022. "Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector," CEPR Discussion Papers 15837, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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