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The Transition of Corruption: From Poverty to Honesty

  • Erich Gundlach
  • Martin Paldam

Measures of corruption and income are highly correlated across countries. We use prehistoric measures of biogeography as instruments for modern income levels to identify an exogenous long-run income effect. We find that our corruption-free incomes explain the cross-country pattern of corruption just as well as actual incomes. This result suggests that the long-run causality is exclusively from income to corruption. As countries get rich, corruption vanishes and there is a transition of corruption from poverty to honesty

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File URL: https://www.ifw-members.ifw-kiel.de/publications/the-transition-of-corruption-from-poverty-to-honesty/KWP_1411_EGMP_Corruption_18_3_2008.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1411.

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Length: 8 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:kie:kieliw:1411
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  1. Gundlach, Erich & Paldam, Martin, 2009. "A farewell to critical junctures: Sorting out long-run causality of income and democracy," European Journal of Political Economy, Elsevier, vol. 25(3), pages 340-354, September.
  2. Erich Gundlach & Martin Paldam, 2008. "The Democratic Transition. A study of the causality between income and the Gastil democracy index," Economics Working Papers 2008-15, Department of Economics and Business Economics, Aarhus University.
  3. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-91, September.
  4. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World
    [A Farewell to Alms: A Brief Economic History of the World]
    ," Introductory Chapters, Princeton University Press.
  5. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1998. "The Quality of Goverment," NBER Working Papers 6727, National Bureau of Economic Research, Inc.
  6. Oded Galor, 2004. "From Stagnation to Growth: Unified Growth Theory," GE, Growth, Math methods 0409003, EconWPA.
  7. Paldam, Martin & Gundlach, Erich, 2008. "Democratic transition, The : a study of the causality between income and the Gastil democracy index," Kiel Working Papers 1459, Kiel Institute for the World Economy (IfW).
  8. Martin Paldam & Erich Gundlach, 2007. "Two Views on Institutions and Development: The Grand Transition vs. the Primacy of Institutions," Kiel Working Papers 1315, Kiel Institute for the World Economy.
  9. Olsson, Ola & Hibbs Jr., Douglas A., 2000. "Biogeography and Long-Run Economic Development," Working Papers in Economics 26, University of Gothenburg, Department of Economics, revised 11 Aug 2000.
  10. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
  11. Lambsdorff,Johann Graf, 2007. "The Institutional Economics of Corruption and Reform," Cambridge Books, Cambridge University Press, number 9780521872751.
  12. Paldam, Martin, 2001. "Corruption and Religion Adding to the Economic Model," Kyklos, Wiley Blackwell, vol. 54(2-3), pages 383-413.
  13. Gundlach, Erich & Paldam, Martin, 2008. "A farewell to critical junctures: Sorting out long-run causality of income and democracy," Kiel Working Papers 1410, Kiel Institute for the World Economy (IfW).
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