IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v148y2011i3p471-490.html
   My bibliography  Save this article

Government fragmentation versus fiscal decentralization and corruption

Author

Listed:
  • Rajeev Goel
  • Michael Nelson

Abstract

This research adds to the literature on the nexus between government and corruption by examining further the influence of government decentralization on corruption. Previous research has focused primarily on fiscal decentralization. We bring additional evidence to bear for the United States by addressing whether the structure of local governments – measured both in terms of the scope of services offered and the size of the population served – has a bearing on corruption within the state. Results show that government decentralization does not necessarily reduce corruption – the type of decentralization matters. Specifically, we find that more general-purpose governments consistently contribute to corruption. In contrast, the effect of special-purpose governments on corruption is mixed. The findings uniquely flush out the tension between fiscal decentralization and fragmental local government structures in terms of impacts on corruption. Beyond this, we find that the influences of various government enforcement agencies on corruption, including police, judiciary and corrections, vary. Other corruption determinants generally support the literature. Policy implications are discussed.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Rajeev Goel & Michael Nelson, 2011. "Government fragmentation versus fiscal decentralization and corruption," Public Choice, Springer, vol. 148(3), pages 471-490, September.
  • Handle: RePEc:kap:pubcho:v:148:y:2011:i:3:p:471-490
    DOI: 10.1007/s11127-010-9666-x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11127-010-9666-x
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s11127-010-9666-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. G. Gulsun Arikan, 2004. "Fiscal Decentralization: A Remedy for Corruption?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 175-195, March.
    2. Mookherjee, Dilip & Png, I P L, 1995. "Corruptible Law Enforcers: How Should They Be Compensated?," Economic Journal, Royal Economic Society, vol. 105(428), pages 145-159, January.
    3. Fisher, Ronald C. & Wassmer, Robert W., 1998. "Economic Influences on the Structure of Local Government in U.S. Metropolitan Areas," Journal of Urban Economics, Elsevier, vol. 43(3), pages 444-471, May.
    4. Rafael La Porta & Florencio Lopez-de-Silanes & Cristian Pop-Eleches & Andrei Shleifer, 2004. "Judicial Checks and Balances," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 445-470, April.
    5. Goel, Rajeev K. & Nelson, Michael A., 2010. "Causes of corruption: History, geography and government," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 433-447, July.
    6. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    7. Abhijit V. Banerjee, 1997. "A Theory of Misgovernance," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1289-1332.
    8. Mikael Priks, 2011. "Judiciaries in corrupt societies," Economics of Governance, Springer, vol. 12(1), pages 75-88, March.
    9. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and Corruption: Evidence from U.S. Federal Transfer Programs," Public Choice, Springer, vol. 113(1-2), pages 25-35, October.
    10. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    11. Basu, Kaushik & Bhattacharya, Sudipto & Mishra, Ajit, 1992. "Notes on bribery and the control of corruption," Journal of Public Economics, Elsevier, vol. 48(3), pages 349-359, August.
    12. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    13. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
    14. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, February.
    15. Arzaghi, Mohammad & Henderson, J. Vernon, 2005. "Why countries are fiscally decentralizing," Journal of Public Economics, Elsevier, vol. 89(7), pages 1157-1189, July.
    16. Glaeser, Edward L. & Saks, Raven E., 2006. "Corruption in America," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1053-1072, August.
    17. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
    18. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    19. Jan K. Brueckner, 2000. "Fiscal Decentralization in Developing Countries: The Effects of Local Corruption and Tax Evasion," Annals of Economics and Finance, Society for AEF, vol. 1(1), pages 1-18, May.
    20. Anwar Shah, 2006. "Corruption and Decentralized Public Governance," Chapters, in: Ehtisham Ahmad & Giorgio Brosio (ed.), Handbook of Fiscal Federalism, chapter 19, Edward Elgar Publishing.
    21. ., 1995. "Public finances and the cycle," Occasional Papers 4, The Public Enquiries Unit, HM Treasury.
    22. International Monetary Fund, 1997. "Corruption and the Rate of Temptation: Do Low Wages in the Civil Service Cause Corruption?," IMF Working Papers 1997/073, International Monetary Fund.
    23. Johann Graf Lambsdorff & Sitki Utku Teksoz, 2002. "Corrupt Relational Contracting," Departmental Discussion Papers 113, University of Goettingen, Department of Economics.
    24. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages 632-652, November.
    25. Arvind K. Jain, 2001. "Corruption: A Review," Journal of Economic Surveys, Wiley Blackwell, vol. 15(1), pages 71-121, February.
    26. Rajeev Goel & Daniel Rich, 1989. "On the economic incentives for taking bribes," Public Choice, Springer, vol. 61(3), pages 269-275, June.
    27. Danila Serra, 2006. "Empirical determinants of corruption: A sensitivity analysis," Public Choice, Springer, vol. 126(1), pages 225-256, January.
    28. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
    29. Goel, Rajeev K. & Nelson, Michael A., 2007. "Are corrupt acts contagious?: Evidence from the United States," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 839-850.
    30. repec:hrv:faseco:30747160 is not listed on IDEAS
    31. Guriev, Sergei, 2004. "Red tape and corruption," Journal of Development Economics, Elsevier, vol. 73(2), pages 489-504, April.
    32. Paldam, Martin, 2002. "The cross-country pattern of corruption: economics, culture and the seesaw dynamics," European Journal of Political Economy, Elsevier, vol. 18(2), pages 215-240, June.
    33. Goel, Rajeev K & Nelson, Michael A, 1998. "Corruption and Government Size: A Disaggregated Analysis," Public Choice, Springer, vol. 97(1-2), pages 107-120, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rajeev K. Goel & Ummad Mazhar & Michael A. Nelson & Rati Ram, 2016. "Government Decentralization and International Government Performance," CESifo Working Paper Series 6013, CESifo.
    2. Adriana S. Cordis, 2014. "Corruption and the Composition of Public Spending in the United States," Public Finance Review, , vol. 42(6), pages 745-773, November.
    3. Akhmad Samsul Ulum & Abdul Rohman & Puji Harto & Dwi Ratmono & Imam Ghozali, 2019. "The Role of Natural Resources on Moderating the Relationship between Fiscal Decentralization and Corruption: Evidence from Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(1), pages 67-75.
    4. Goel, Rajeev K. & Mazhar, Ummad & Nelson, Michael A. & Ram, Rati, 2017. "Different forms of decentralization and their impact on government performance: Micro-level evidence from 113 countries," Economic Modelling, Elsevier, vol. 62(C), pages 171-183.
    5. Jeffrey Milyo & Adriana Cordis, 2013. "Measuring Public Corruption in the United States: Evidence from Administrative Records of Federal Prosecutions," Working Papers 1322, Department of Economics, University of Missouri.
    6. Nadia Fiorino & Emma Galli & Fabio Padovano, 2013. "Do fiscal decentralization and government fragmentation affect corruption in different ways? Evidence from a panel data analysis," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 5, pages 121-147, Edward Elgar Publishing.
    7. Yongzheng Liu & Haibo Feng, 2015. "Tax structure and corruption: cross-country evidence," Public Choice, Springer, vol. 162(1), pages 57-78, January.
    8. Hailin Chen & Friedrich Schneider & Qunli Sun, 2018. "Size, Determinants, and Consequences of Corruption in China's Provinces: The MIMIC Approach," CESifo Working Paper Series 7175, CESifo.
    9. Andreas Bergh & Günther Fink & Richard Öhrvall, 2017. "More politicians, more corruption: evidence from Swedish municipalities," Public Choice, Springer, vol. 172(3), pages 483-500, September.
    10. Kumara, Ajantha Sisira & Handapangoda, Wasana Sampath, 2014. "Political environment a ground for public sector corruption? Evidence from a cross-country analysis," MPRA Paper 54721, University Library of Munich, Germany, revised 22 Mar 2014.
    11. James E. Alt & David Dreyer Lassen, 2010. "Enforcement and Public Corruption: Evidence from US States," EPRU Working Paper Series 2010-08, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    12. Rajeev K. Goel & James W. Saunoris, 2017. "Forms of government decentralization and institutional quality: evidence from a large sample of nations," Chapters, in: Naoyuki Yoshino & Peter J. Morgan (ed.), Central and Local Government Relations in Asia, chapter 12, pages 395-420, Edward Elgar Publishing.
    13. Thuy Nguyen & Victoria Perez, 2020. "Privatizing Plaintiffs: How Medicaid, the False Claims Act, and Decentralized Fraud Detection Affect Public Fraud Enforcement Efforts," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(4), pages 1063-1091, December.
    14. Choe, Chongwoo & Raschky, Paul A., 2016. "Media, institutions, and government action: Prevention vs. palliation in the time of cholera," European Journal of Political Economy, Elsevier, vol. 41(C), pages 75-93.
    15. Michael A. Nelson, 2013. "Corruption and the size of local governments: are they related?," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 4, pages 83-120, Edward Elgar Publishing.
    16. Rajeev K. Goel & James W. Saunoris, 2016. "Virtual Versus Physical Government Decentralization: Effects on Corruption and the Shadow Economy," Public Budgeting & Finance, Wiley Blackwell, vol. 36(4), pages 68-93, December.
    17. Rajeev K Goel & Jelena Budak & Edo Rajh, 2013. "Bureaucratic Monopoly and the Nature and Timing of Bribes: Evidence from Croatian Data," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 55(1), pages 43-58, March.
    18. Tristan Canare, 2021. "Decentralization and Development Outcomes: What Does the Empirical Literature Really Say?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 237(2), pages 111-151, June.
    19. Rajeev K. Goel, 2013. "Initiation of corrupt exchanges and severity of corruption," Financial Theory and Practice, Institute of Public Finance, vol. 37(2), pages 207-222.
    20. Maria Rosaria Alfano & Anna Laura Baraldi & Claudia Cantabene, 2019. "The Effect of Fiscal Decentralization on Corruption: A Non‐linear Hypothesis," German Economic Review, Verein für Socialpolitik, vol. 20(1), pages 105-128, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Goel, Rajeev K. & Nelson, Michael A., 2010. "Causes of corruption: History, geography and government," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 433-447, July.
    2. Rajeev Goel & Michael Nelson, 2011. "Measures of corruption and determinants of US corruption," Economics of Governance, Springer, vol. 12(2), pages 155-176, June.
    3. Rajeev K. Goel, 2013. "Initiation of corrupt exchanges and severity of corruption," Financial Theory and Practice, Institute of Public Finance, vol. 37(2), pages 207-222.
    4. Rajeev K. Goel, 2012. "Business regulation and taxation: effects on cross-country corruption," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(3), pages 223-242, September.
    5. Eugen Dimant & Guglielmo Tosato, 2018. "Causes And Effects Of Corruption: What Has Past Decade'S Empirical Research Taught Us? A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 335-356, April.
    6. Salvatore Capasso & Rajeev K. Goel & James W. Saunoris, 2019. "Is it the gums, teeth or the bite? Effectiveness of dimensions of enforcement in curbing corruption," Economics of Governance, Springer, vol. 20(4), pages 329-369, December.
    7. Rajeev K. Goel & Michael A. Nelson, 2014. "Whistleblower laws and exposed corruption in the United States," Applied Economics, Taylor & Francis Journals, vol. 46(20), pages 2331-2341, July.
    8. Michael A. Nelson, 2013. "Corruption and the size of local governments: are they related?," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 4, pages 83-120, Edward Elgar Publishing.
    9. Rajeev K. Goel & James W. Saunoris, 2016. "Military Buildups, Economic Development and Corruption," Manchester School, University of Manchester, vol. 84(6), pages 697-722, December.
    10. Vincenzo Alfano & Salvatore Capasso & Rajeev K. Goel, 2021. "EU accession: A boon or bane for corruption?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(1), pages 1-21, January.
    11. Goel, Rajeev K. & Nelson, Michael A., 2007. "Are corrupt acts contagious?: Evidence from the United States," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 839-850.
    12. Billger, Sherrilyn M. & Goel, Rajeev K., 2009. "Do existing corruption levels matter in controlling corruption?: Cross-country quantile regression estimates," Journal of Development Economics, Elsevier, vol. 90(2), pages 299-305, November.
    13. Mikael Priks, 2012. "Competition among officials and the abuse of power," Public Choice, Springer, vol. 150(3), pages 425-438, March.
    14. Goel, Rajeev K. & Nelson, Michael A. & Naretta, Michael A., 2012. "The internet as an indicator of corruption awareness," European Journal of Political Economy, Elsevier, vol. 28(1), pages 64-75.
    15. Bin Dong & Benno Torgler, 2010. "The Causes of Corruption: Evidence from China," Working Papers 2010.72, Fondazione Eni Enrico Mattei.
    16. repec:hhs:bofitp:2009_005 is not listed on IDEAS
    17. Bin Dong & Benno Torgler, 2010. "The Causes of Corruption: Evidence from China," Working Papers 2010.72, Fondazione Eni Enrico Mattei.
    18. Nadia Fiorino & Emma Galli & Fabio Padovano, 2013. "Do fiscal decentralization and government fragmentation affect corruption in different ways? Evidence from a panel data analysis," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 5, pages 121-147, Edward Elgar Publishing.
    19. Blaise Gnimassoun, Joseph Keneck Massil, 2019. "Determinants of corruption: can we put all countries in the same basket?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 16(2), pages 239-276, December.
    20. Blaise Gnimassoun & Joseph Keneck, 2015. "Determinants of corruption: Can we put all countries in the same basket?," Working Papers of BETA 2015-31, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

    More about this item

    Keywords

    Corruption; Fiscal decentralization; Local government fragmentation; Special-purpose government; General-purpose government; H73; H11;
    All these keywords.

    JEL classification:

    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:148:y:2011:i:3:p:471-490. 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: . General contact details of provider: http://www.springer.com .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.