Human capital and corruption: a microeconomic model of the bribes market with democratic contestability
To overcome market failures society creates common laws that stimulate or penalize individual actions, the enforcement of which depends on the actions of public authorities who may be susceptible to corruption. Thus, a new market emerges where ‘influences’ are traded. Legislators have incentives to deviate from the goal of efficiency and produce laws that maximize the gains that can be expected from bribes. We model this behaviour for an autocracy versus a democracy, using a microeconomic framework. We assume that in an autocracy rulers have a monopoly over the bribes market, whereas in a democracy conflicting groups compete in the bribes market. In order to bring about the downfall of the incumbent rulers, these groups inform voters of the rulers' deviant actions so that, by a stochastic process, they convince voters of the existence of bribes and therefore gain their votes. The models constructed produce results that are compatible with the well-known stylized facts, namely that (1) in a democracy the level of corruption is lower than in an autocracy, although still positive, that (2) in environments where the level of human capital is higher (the proxy for the voters’ receptivity to the efforts of the opposition), regimes are closer to democracies and the level of corruption is lower, and that (3) the level of corruption is higher in more regulated economies.
|Date of creation:||May 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Rua Dr. Roberto Frias, 4200 PORTO|
Web page: http://www.fep.up.pt/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fisman, Raymond & Svensson, Jakob, 2007.
"Are corruption and taxation really harmful to growth? Firm level evidence,"
Journal of Development Economics,
Elsevier, vol. 83(1), pages 63-75, May.
- Fisman, Raymond & Svensson, Jakob, 2000. "Are corruption and taxation really harmful to growth? - firm-level evidence," Policy Research Working Paper Series 2485, The World Bank.
- Xiaohui Xin & Thomas K. Rudel, 2004. "The Context for Political Corruption: A Cross-National Analysis," Social Science Quarterly, Southwestern Social Science Association, vol. 85(2), pages 294-309.
- Robert J. Barro, 1994. "Democracy & Growth," NBER Working Papers 4909, National Bureau of Economic Research, Inc.
- Rajeev K. Goel & Michael A. Nelson, 2005. "Economic Freedom Versus Political Freedom: Cross-Country Influences On Corruption ," Australian Economic Papers, Wiley Blackwell, vol. 44(2), pages 121-133, 06.
- Alberto Ades & Rafael Di Tella, 1997. "The New Economics of Corruption: a Survey and Some New Results," Political Studies, Political Studies Association, vol. 45(3), pages 496-515.
- Fisman, Raymond & Gatti, Roberta, 2002.
"Decentralization and corruption: evidence across countries,"
Journal of Public Economics,
Elsevier, vol. 83(3), pages 325-345, March.
- Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
- Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
- Robert J. Barro, 1989.
"Economic Growth in a Cross Section of Countries,"
NBER Working Papers
3120, National Bureau of Economic Research, Inc.
- Barreto, Raul A., 2000. "Endogenous corruption in a neoclassical growth model," European Economic Review, Elsevier, vol. 44(1), pages 35-60, January.
- Gibbons, Michael & Johnston, Ron, 1974. "The roles of science in technological innovation," Research Policy, Elsevier, vol. 3(3), pages 220-242, November.
- Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
- Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
- Rose-Ackerman, Susan, 2002. ""Grand" corruption and the ethics of global business," Journal of Banking & Finance, Elsevier, vol. 26(9), pages 1889-1918, September.
When requesting a correction, please mention this item's handle: RePEc:por:fepwps:212. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.