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Corruption, regulation, and growth: an empirical study of the United States

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  • Noel Johnson
  • William Ruger
  • Jason Sorens
  • Steven Yamarik

Abstract

This paper investigates whether the costs of corruption are conditional on the extent of government intervention in the economy. We use data on corruption convictions and economic growth between 1975 and 2007 across the US states to test this hypothesis. Although no state approaches the level of government intervention found in many developing countries, we still find evidence for the “weak” form of the grease-the-wheels hypothesis. While corruption is never good for growth, its harmful effects are smaller in states with more regulation. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Noel Johnson & William Ruger & Jason Sorens & Steven Yamarik, 2014. "Corruption, regulation, and growth: an empirical study of the United States," Economics of Governance, Springer, vol. 15(1), pages 51-69, February.
    • Handle: RePEc:spr:ecogov:v:15:y:2014:i:1:p:51-69
    DOI: 10.1007/s10101-013-0132-3
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    3. Arteaga, Fernando & Desierto, Desiree & Koyama, Mark, 2024. "Shipwrecked by rents," Journal of Development Economics, Elsevier, vol. 168(C).
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    5. Ismail M. Cole, 2023. "The political economy triangle of government spending, interest‐group influence, and income inequality: Evidence and implications from the US states," Economics and Politics, Wiley Blackwell, vol. 35(3), pages 1122-1176, November.
    6. Vicente German-Soto & Gregory Brock, 2022. "Overall US and Census Region β-Convergence 1963–2015 Controlling for Spatial Effects," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(1), pages 44-67, March.
    7. Trabelsi, Mohamed Ali & Trabelsi, Hédi, 2014. "At what level of corruption does economic growth decrease?," MPRA Paper 81279, University Library of Munich, Germany.
    8. Claudio Detotto & Bryan C. McCannon, 2017. "Economic freedom and public, non-market institutions: evidence from criminal prosecution," Economics of Governance, Springer, vol. 18(2), pages 107-128, May.
    9. Assoumou-Ella, Giscard & Nkah-Ella, Cédric, 2024. "Climate change, governance, and macroeconomic stability: Empirical analysis in a panel of African countries," Emerging Markets Review, Elsevier, vol. 61(C).
    10. Cole, Ismail M. & Agiobenebo, Tamunopriye J., 2022. "Special interest groups, labor market regulations, and labor market performance in the U.S. states," EconStor Preprints 265087, ZBW - Leibniz Information Centre for Economics.
    11. Turhan Kaymak & Eralp Bektas, 2015. "Corruption in Emerging Markets: A Multidimensional Study," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(3), pages 785-805, December.
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    13. Mohamed Ali Trabelsi & Hédi Trabelsi, 2020. "At what level of corruption does economic growth decrease?," Journal of Financial Crime, Emerald Group Publishing Limited, vol. 28(4), pages 1317-1324, March.
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    More about this item

    Keywords

    Corruption; US states; Growth; Regulation; K4; O1; H7; H0; D7;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H0 - Public Economics - - General
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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