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Political Stability, Corruption and Trust in Politicians

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  • Ingmar Schumacher

    (Department of Economics, Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique, IPAG - Business School)

Abstract

In this article we develop a dynamic model where an endogenous evolution of trust impacts a politician's choice for bribe-taking and tax re-distribution. The politician obtains utility from net income that comes from his wage income, tax embezzlements and bribe-taking, and he also has incentives for tax re-distribution. The higher the tax embezzlements and the more bribes the politician takes the lower his citizens' trust and the less likely will he be re-elected. We support the evolution of trust with an econometric investigation. We analyze the necessary and su cient conditions, and nd that withholding taxes and taking bribes may be complements or substitutes for a politician, depending on the politician's incentives for tax re-distribution. Without these incentives, tax embezzlement and bribe taking are necessarily substitutes. With su ciently strong incentives, we nd re-distribution and bribe-taking may become complements. Complements implies that the politician, at least partly, increases bribe-taking because this allows him to increase re-distribution, which aids his additional motives for tax re-distribution. Based on comparative statics at steady state we also nd that the higher the politician's wage the lower the bribe-taking and the higher the trust; stronger social capital leads to less bribe-taking and higher levels of trust; improvements in electoral accountability induce a decrease in bribing while trust increases.

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  • Ingmar Schumacher, 2012. "Political Stability, Corruption and Trust in Politicians," Working Papers hal-00763327, HAL.
  • Handle: RePEc:hal:wpaper:hal-00763327
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00763327
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    Cited by:

    1. Igor Benati & Mario Coccia, 2017. "The relation between public manager compensation and members of parliament’s salary across OECD countries: explorative analysis and possible determinants with public policy implications," quaderni IRCrES 201702, Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY.
    2. Pierre Cahuc & Yann Algan, 2009. "Civic Virtue and Labor Market Institutions," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 111-145, January.
    3. Mohammad Reza Farzanegan & Stefan Witthuhn, 2014. "Demographic Transition and Political Stability: Does Corruption Matter?," CESifo Working Paper Series 5133, CESifo Group Munich.
    4. Leonardo Andrade Rocha & Ahmad Saeed Khan & Patrícia Verônica Pinheiro Sales Lima & Maria Ester Dal Poz & Fernando Porfirio Soares De Oliveira, 2016. "Corrupção, Burocracia E Outras Falhas Institucionais: O “Câncer” Da Inovação E Do Desenvolvimento," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 090, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].

    More about this item

    Keywords

    dynamic model; : trust; corruption; political stability; bribe; dynamic model.;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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