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The transition of corruption: From poverty to honesty

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  • Gundlach, Erich
  • Paldam, Martin

Abstract

Measures of corruption and income are highly correlated across countries. We use prehistoric measures of biogeography as instruments for modern income levels. We find that our instrumented incomes explain the cross-country pattern of corruption just as well as do actual incomes. This result demonstrates that the long-run causality is entirely from income to corruption. Hence, there is a Corruption Transition: As countries get rich, corruption vanishes.

Suggested Citation

  • Gundlach, Erich & Paldam, Martin, 2008. "The transition of corruption: From poverty to honesty," Kiel Working Papers 1411, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1411
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    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
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    More about this item

    Keywords

    Corruption; Biogeography; Long-run development;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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