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Wages and Other Determinants of Corruption

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  • Luis A. Sosa

Abstract

Raising wages has commonly been viewed as an anticorruption policy by policymakers from both governments and multilateral development organizations. Conventional wisdom and recent theoretical work suggest that low wages encourage corruption. Nevertheless, the empirical studies done on the wage– corruption tradeoff are econometric estimates that find no conclusive support for the effectiveness of increasing wages as an anticorruption measure. The unique contributions of this paper are the application of an expected utility model to explain the emergence of corruption, and the use of comparative static results that are consistent with the empirical evidence and useful for the design of anticorruption policies. The most important result from the expected utility model is that anticorruption policies designed to increase the net income of potentially corrupt agents not only may be ineffective but may actually encourage corruption.

Suggested Citation

  • Luis A. Sosa, 2004. "Wages and Other Determinants of Corruption," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 597-605, November.
    • Handle: RePEc:bla:rdevec:v:8:y:2004:i:4:p:597-605
    DOI: 10.1111/j.1467-9361.2004.00255.x
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    References listed on IDEAS

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    Cited by:

    1. Olivier Armantier & Amadou Boly, 2008. "Can Corruption Be Studied in the Lab? Comparing a Field and a Lab Experiment," CIRANO Working Papers 2008s-26, CIRANO.
    2. Orkodashvili, Mariam, 2010. "Shadow economy revisited: logic, morality and intuition in corrupt practices and illegal channels," MPRA Paper 20391, University Library of Munich, Germany.
    3. Hyacinthe Tchewonpi Kankeu & Sylvie Boyer & Raoul Fodjo Toukam & Mohammad Abu-Zaineh, 2016. "How do supply-side factors influence informal payments for healthcare? The case of HIV patients in Cameroon," International Journal of Health Planning and Management, Wiley Blackwell, vol. 31(1), pages 41-57, January.
    4. Jamil, Faisal & Ahmad, Eatzaz, 2019. "Policy considerations for limiting electricity theft in the developing countries," Energy Policy, Elsevier, vol. 129(C), pages 452-458.
    5. Demirgüç-Kunt, Asli & Lokshin, Michael & Kolchin, Vladimir, 2023. "Effects of public sector wages on corruption: Wage inequality matters," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 941-959.
    6. Gustavo Piga, 2011. "A Fighting Chance Against Corruption in Public Procurement?," Chapters, in: Susan Rose-Ackerman & Tina Søreide (ed.), International Handbook on the Economics of Corruption, Volume Two, chapter 5, Edward Elgar Publishing.
    7. Günther G. Schulze & Bambang Suharnoko Sjahrir & Nikita Zakharov, 2016. "Corruption in Russia," Journal of Law and Economics, University of Chicago Press, vol. 59(1), pages 135-171.
    8. Zhigang Zheng & Li-An Zhou & Yanmei Sun & Chao Chen, 2016. "Executive Compensation and Legal Investor Protection: Evidence from China's Listed Firms," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 39-47, February.
    9. Ratbek Dzhumashev, 2014. "The Two-Way Relationship Between Government Spending And Corruption And Its Effects On Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 403-419, April.
    10. Osipian, Ararat, 2007. "“Feed from the Service”: Corruption and Coercion in the State—University Relations in Central Eurasia," MPRA Paper 10818, University Library of Munich, Germany.
    11. Dzhumashev, Ratbek, 2014. "Corruption and growth: The role of governance, public spending, and economic development," Economic Modelling, Elsevier, vol. 37(C), pages 202-215.
    12. John Round & Colin C. Williams & Peter Rodgers, 2008. "Corruption in the post-Soviet workplace: the experiences of recent graduates in contemporary Ukraine," Work, Employment & Society, British Sociological Association, vol. 22(1), pages 149-166, March.
    13. Olivier Armantier & Amadou Boly, 2013. "Comparing Corruption in the Laboratory and in the Field in Burkina Faso and in Canada," Economic Journal, Royal Economic Society, vol. 123(12), pages 1168-1187, December.
    14. An, Weihua & Kweon, Yesola, 2017. "Do higher government wages induce less corruption? Cross-country panel evidence," Journal of Policy Modeling, Elsevier, vol. 39(5), pages 809-826.

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