Raising Wages as a Strategy to Reduce Corruption
This paper examines whether raising the salaries of government tax auditors reduces their incentive to accept bribes. It evaluates an optimal tax structure and economic welfare under conditions of perfect and imperfect information in relation to conditions for bribery. The major policy implication of this paper is that it is not necessarily desirable to increase salaries as an anticorruption measure. Even if government can reduce corruption by improving civil servants’ pay, obtaining funds to do so by raising the income tax will worsen economic welfare, based on the optimal tax structure.
|Date of creation:||21 Oct 2011|
|Date of revision:|
|Publication status:||Published in Journal of Management and Strategy 4.2(2011): pp. 56-63|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
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- Kim C. Border & Joel Sobel, 1987. "Samurai Accountant: A Theory of Auditing and Plunder," Review of Economic Studies, Oxford University Press, vol. 54(4), pages 525-540.
- Reinganum, Jennifer F. & Wilde, Louis L., 1985. "Income tax compliance in a principal-agent framework," Journal of Public Economics, Elsevier, vol. 26(1), pages 1-18, February.
- Dilip Mookherjee & Ivan Png, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 399-415.
- Mookherjee, Dilip & Png, I P L, 1990. "Enforcement Costs and the Optimal Progressivity of Income Taxes," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(2), pages 410-31, Fall.
- Nahum D. Melumad & Dilip Mookherjee, 1989. "Delegation as Commitment: The Case of Income Tax Audits," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 139-163, Summer.
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