IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Admission is free only if your dad is rich! distributional effects of corruption in schools in developing countries

  • Emran, M. Shahe
  • Islam, Asadul
  • Shilpi, Forhad

In the standard model of corruption, the rich are more likely to pay bribes for their children's education, reflecting higher ability to pay. This prediction is, however, driven by the assumption that the probability of punishment for bribe-taking is invariant across households. In many developing countries lacking in rule of law, this assumption is untenable, because the enforcement of law is not impersonal or unbiased and the poor have little bargaining power. In a more realistic model where the probability of punishment depends on the household's economic status, bribes are likely to be regressive, both at the extensive and intensive margins. Using rainfall variations as an instrument for household income in rural Bangladesh, this paper finds strong evidence that corruption in schools is doubly regressive: (i) the poor are more likely to pay bribes, and (ii) among the bribe payers, the poor pay a higher share of their income. The results indicate that progressivity in bribes reported in the earlier literature may be due to identification challenges. The Ordinary Least Squares regressions show that bribes increase with household income, but the Instrumental Variables estimates suggest that the Ordinary Least Squares results are spurious, driven by selection on ability and preference. The evidence reported in this paper implies that"free schooling"is free only for the rich and corruption makes the playing field skewed against the poor. This may provide a partial explanation for the observed educational immobility in developing countries.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/10/22/000158349_20131022142859/Rendered/PDF/WPS6671.pdf
Download Restriction: no

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6671.

as
in new window

Length:
Date of creation: 01 Oct 2013
Date of revision:
Handle: RePEc:wbk:wbrwps:6671
Contact details of provider: Postal:
1818 H Street, N.W., Washington, DC 20433

Phone: (202) 477-1234
Web page: http://www.worldbank.org/
Email:


More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Benjamin A. Olken, 2006. "Corruption Perceptions vs. Corruption Reality," NBER Working Papers 12428, National Bureau of Economic Research, Inc.
  2. Martina Björkman & Jakob Svensson, 2010. "When Is Community-Based Monitoring Effective? Evidence from a Randomized Experiment in Primary Health in Uganda," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 571-581, 04-05.
  3. Carneiro, Pedro & Meghir, Costas & Parey, Matthias, 2007. "Maternal Education, Home Environments and the Development of Children and Adolescents," CEPR Discussion Papers 6505, C.E.P.R. Discussion Papers.
  4. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
  5. Benjamin A. Olken & Patrick Barron, 2007. "The Simple Economics of Extortion: Evidence from Trucking in Aceh," NBER Working Papers 13145, National Bureau of Economic Research, Inc.
  6. Peter Ebbes & Michel Wedel & Ulf Böckenholt, 2009. "Frugal IV alternatives to identify the parameter for an endogenous regressor," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(3), pages 446-468, 04.
  7. Mehlum, Halvor & Miguel, Edward & Torvik, Ragnar, 2006. "Poverty and crime in 19th century Germany," Journal of Urban Economics, Elsevier, vol. 59(3), pages 370-388, May.
  8. Oecd & Nea, 2010. "Case Law," Nuclear Law Bulletin, OECD Publishing, vol. 2010(1), pages 93-102.
  9. Sequeira, Sandra & Djankov, Simeon, 2010. "An Empirical Study of Corruption in Ports," MPRA Paper 21791, University Library of Munich, Germany.
  10. Naci Mocan, 2008. "What Determines Corruption? International Evidence From Microdata," Economic Inquiry, Western Economic Association International, vol. 46(4), pages 493-510, October.
  11. M. Shahe Emran & Asadul Islam & Forhad Shilpi, 2013. "Admission is Free Only if Your Dad is Rich! Distributional Effects of Corruption in Schools in Developing Countries," Monash Economics Working Papers 11-13, Monash University, Department of Economics.
  12. World Bank, 2013. "Seeding Fertile Ground : Education that Works for Bangladesh," World Bank Other Operational Studies 16768, The World Bank.
  13. Jakob Svensson, 2003. "Who Must Pay Bribes and How Much? Evidence from a Cross Section of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 207-230.
  14. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
  15. Oecd & Nea, 2011. "Case Law," Nuclear Law Bulletin, OECD Publishing, vol. 2010(2), pages 67-73.
  16. 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.
  17. Benjamin A. Olken, 2007. "Monitoring Corruption: Evidence from a Field Experiment in Indonesia," Journal of Political Economy, University of Chicago Press, vol. 115, pages 200-249.
  18. Hunt, Jennifer & Laszlo, Sonia, 2012. "Is Bribery Really Regressive? Bribery’s Costs, Benefits, and Mechanisms," World Development, Elsevier, vol. 40(2), pages 355-372.
  19. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, vol. 81(1), pages 80-96, October.
  20. Hunt, Jennifer, 2010. "Bribery in health care in Uganda," Journal of Health Economics, Elsevier, vol. 29(5), pages 699-707, September.
  21. Ferraz, Claudio & Finan, Frederico & Moreira, Diana B., 2012. "Corrupting learning," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 712-726.
  22. repec:taf:jnlbes:v:30:y:2012:i:1:p:67-80 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:6671. 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: (Roula I. Yazigi)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.