Premium
Wages and Other Determinants of Corruption
Author(s) -
Sosa Luis A.
Publication year - 2004
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2004.00255.x
Subject(s) - economics , language change , wage , work (physics) , empirical evidence , public economics , labour economics , macroeconomics , mechanical engineering , art , philosophy , literature , epistemology , engineering
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.