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Officials Versus Thieves: Is Public or Private Expropriation More Harmful to Small Firms?

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  • Sarah Pearlman

Abstract

Corruption and crime are factors that regularly affect firms, yet few papers compare the two impacts. This is largely due to a lack of data, something I overcome using recent surveys of microenterprises in Mexico. After instrumenting for individual firm-level incidence, I find that thieves are much more harmful to microenterprises than officials. The incidence of robbery and extortion is associated with declines in income and employees, while the incidence of bribery and fines are associated with increases in both. This highlights that crime can be a larger deterrent to firm growth than corruption in certain environments.

Suggested Citation

  • Sarah Pearlman, 2014. "Officials Versus Thieves: Is Public or Private Expropriation More Harmful to Small Firms?," Journal of Development Studies, Taylor & Francis Journals, vol. 50(6), pages 773-788, June.
    • Handle: RePEc:taf:jdevst:v:50:y:2014:i:6:p:773-788
    DOI: 10.1080/00220388.2014.895819
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    Cited by:

    1. Oguzoglu Umut & Ranasinghe Ashantha, 2017. "Crime and Establishment Size: Evidence from South America," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-17, October.
    2. Godwin Okafor & Obiajulu Ede, 2023. "Kidnapping rate and capital flight: Empirical evidence from developing countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2590-2606, July.
    3. Antonio Estache, 2014. "Infrastructure and Corruption: a Brief Survey," Working Papers ECARES ECARES 2014-37, ULB -- Universite Libre de Bruxelles.

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