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Bribery: Who Pays, Who Refuses, What Are The Payoffs?

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  • Jennifer Hunt

    ()

  • Sonia Laszlo

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Abstract

We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the payoffs to the client's decision. We test this framework using a new data set on bribery of Peruvian public officials by households. The theory predicts that bribery is more attractive to both parties when the client is richer, and we find empirically that both bribery indidence and value are increasing in household income. However, 65% of the relation between bribery incidence and income is explained by greater use of officials by high-income households, and by their use of more corrupt types of official. Compared to a client dealing with an honest official, a client who pays a bribe has a probability 16 percentage points lower. This indicates that service improvements in response to a bribe merely offset service reductions associated with angling for a bribe, and that clients refusing to bribe are punished. We use these and other results to argue that bribery is not a regressive tax.

Suggested Citation

  • Jennifer Hunt & Sonia Laszlo, 2006. "Bribery: Who Pays, Who Refuses, What Are The Payoffs?," Departmental Working Papers 2006-06, McGill University, Department of Economics.
  • Handle: RePEc:mcl:mclwop:2006-06
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    Cited by:

    1. Hunt, Jennifer, 2007. "How corruption hits people when they are down," Journal of Development Economics, Elsevier, vol. 84(2), pages 574-589, November.
    2. B. Burcin Yurtoglu & Christine Zulehner, 2007. "The gender wage gap in top corporate jobs is still there," Vienna Economics Papers 0701, University of Vienna, Department of Economics.
    3. Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2010. "Financial liberalization, bureaucratic corruption and economic development," Journal of International Money and Finance, Elsevier, vol. 29(7), pages 1321-1339, November.
    4. repec:spr:epolin:v:45:y:2018:i:1:d:10.1007_s40812-017-0086-5 is not listed on IDEAS
    5. Neeman Zvika & Paserman M. Daniele & Simhon Avi, 2008. "Corruption and Openness," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-40, December.
    6. repec:dau:papers:123456789/5135 is not listed on IDEAS
    7. Massimo Finocchiaro Castro & Calogero Guccio & Ilde Rizzo, 2014. "An assessment of the waste effects of corruption on infrastructure provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 813-843, August.
    8. Pande, Rohini, 2008. "Understanding Political Corruption in Low Income Countries," Handbook of Development Economics, Elsevier.
    9. Jennifer Hunt, 2006. "Why Are Some Public Officials More Corrupt Than Others?," Chapters,in: International Handbook on the Economics of Corruption, chapter 11 Edward Elgar Publishing.
    10. Méndez, Fabio & Sepúlveda, Facundo, 2013. "Optimal Government Regulations And Red Tape In An Economy With Corruption," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(1), pages 51-77, June.
    11. Hunt, Jennifer & Laszlo, Sonia, 2012. "Is Bribery Really Regressive? Bribery’s Costs, Benefits, and Mechanisms," World Development, Elsevier, vol. 40(2), pages 355-372.
    12. Chongwoo Choe & Ratbek Dzhumashev & Asadul Islam & Zakir H. Khan, 2011. "Corruption and Network in Education: Evidence from the Household Survey Data in Bangladesh," Monash Economics Working Papers 08-11, Monash University, Department of Economics.
    13. Rodrigues-Neto, José A., 2014. "On corruption, bribes and the exchange of favors," Economic Modelling, Elsevier, vol. 38(C), pages 152-162.
    14. Benjamín YAMB & Oscar BAYEMI, 2016. "Bribery in Cameroonian Public Hospitals: Who Pays and How Much?," Asian Journal of Social Sciences and Management Studies, Asian Online Journal Publishing Group, vol. 3(1), pages 7-17.
    15. Asif Reza Anik & Siegfried Bauer, 2014. "Household Income and Relationships with Different Power Entities as Determinants of Corruption," Contemporary Economics, University of Finance and Management in Warsaw, vol. 8(3), September.

    More about this item

    JEL classification:

    • H80 - Public Economics - - Miscellaneous Issues - - - General
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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