Corruption, mortality rates, and development:Policies for escaping from the poverty trap

We construct a three-period overlapping generations model in which corrup- tion, mortality and fertility rates, and economic development are determined endogenously. We consider a less developed economy suffering from a high degree of corruption and high mortality and fertility rates in a poverty trap. We focus on two policies: raising public sector wages as a means of reducing corruption and increasing public health spending as a means of improving the mortality rate. Our theoretical analysis shows that implementing both policies simultaneously is essential for less developed economies to escape from the poverty trap and achieve economic development.