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Political Stability, Corruption and Trust in Politicians

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  • Ingmar Schumacher

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique, 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
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    2. Bashir Ahmad & Maria Ciupac-Ulici & Daniela-Georgeta Beju, 2021. "Economic and Non-Economic Variables Affecting Fraud in European Countries," Risks, MDPI, vol. 9(6), pages 1-17, June.
    3. 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.
    4. Elena de la Poza & Lucas Jódar & Paloma Merello, 2021. "Modeling Political Corruption in Spain," Mathematics, MDPI, vol. 9(9), pages 1-18, April.
    5. Forson, Joseph Ato & Baah-Ennumh, Theresa Yabaa & Buracom, Ponlapat & Chen, Guojin & Peng, Zhen, 2014. "Causes of Corruption: Evidence from Sub-Sahara Africa," MPRA Paper 102431, University Library of Munich, Germany, revised 20 Mar 2016.
    6. 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.
    7. Tchablemane YENLIDE & Mawussé Komlagan Nézan OKEY, 2022. "Corruption et accès à l’électricité dans les pays de l’Afrique subsaharienne," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 55, pages 23-37.
    8. Adefeso, Hammed, 2018. "Corruption, Political Instability and Development Nexus in Africa: A Call for Sequential Policies Reforms," MPRA Paper 85277, University Library of Munich, Germany.
    9. Mohammad Reza Farzanegan & Stefan Witthuhn, 2014. "Demographic Transition and Political Stability: Does Corruption Matter?," CESifo Working Paper Series 5133, CESifo.
    10. 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.
    11. Stanisław Cichocki & Aleksandra Nagańska, 2021. "Przeciwdziałanie korupcji za pomocą nowoczesnych technologii – analiza skuteczności rozwiązań e-government," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 97-124.
    12. Leonardo A. Rocha & Maria Ester S. Dal Poz & Patrícia V.P.S. Lima & Ahmad S. Khan & Napiê G. A. Silva, 2019. "Corruption, bureaucracy and other institutional failures: the “cancer†of innovation and development," Economics Bulletin, AccessEcon, vol. 39(3), pages 1740-1754.
    13. 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 Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    14. Yu Hao & Chun-Ping Chang & Zao Sun, 2018. "Women and corruption: evidence from multinational panel data," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(4), pages 1447-1468, July.

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    More about this item

    Keywords

    dynamic model; : trust; corruption; political stability; bribe; dynamic model.;
    All these keywords.

    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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