Public Sector Pay and Corruption: Measuring Bribery from Micro Data

By Y. Gorodnichenko, Klara Sabirianova Peter. Social Science Research Network, 2007

245 citations recorded by the source corpus.

This study is the first to provide a systematic measure of bribery using micro-level data on reported earnings, household spending and asset holdings. We use the compensating differential framework and the estimated sectoral gap in reported earnings and expenditures to identify the size of unobserved (unofficial) compensation (i.e., bribes) of public sector employees. In the case of Ukraine, we find that public sector employees receive 24-32% less wages than their private sector counterparts. The gap is particularly large at the top of the wage distribution. At the same time, workers in both sectors have essentially identical level of consumer expenditures and asset holdings that unambiguously indicate the presence of non-reported compensation in the public sector. Using the conditions of labor market equilibrium, we develop an aggregate measure of bribery and find that the lower bound estimate of the extent of bribery in Ukraine is between 460 mln and 580 mln U.S. dollars (0.9-1.2% of Ukraine’s GDP in 2003).

Subfields: Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/b7aa91911f847b16bd017e47e2c3c5d5888f87c2

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Citations in the corpus

Do-gooders and go-getters: career incentives, selection, and performance in public service delivery (2014, background): “To the extent that these offer opportunities for rent-seeking, they might attract agents who are more prone to corruption (Gorodnichenko and Peter, 2007; Hanna and Wang, 2013).”
Corruption and Democracy (2009, background): “At the micro-individual level, van Rijckeghem and Weder ( 1997 ) and Gorodnichenko and Peter ( 2007 ) demonstrate that low public sector wages stimulate corruption among public sector workers.”
CAUSES AND EFFECTS OF CORRUPTION: WHAT HAS PAST DECADE'S EMPIRICAL RESEARCH TAUGHT US? A SURVEY (2018, unknown): “A number of recent seminal studies have paved the way for a more reliable attempt to measure corruption (cf. Gorodnichenko and Peter, 2007; Ferraz and Finan, 2011; Chatterjee and Ray, 2012).”
Firm Growth and Corruption: Empirical Evidence from Vietnam (2017, background): “Other mechanisms proposed in the literature include that growth generates higher bureaucratic salaries, which raises the risks and reduces the incentives of partaking in bribery (Van Rijckeghem and Weder, 2001; Di Tella and Schargrodsky, 2003; Gorodnichenko and Peter, 2007) and that larger firms fin”
Does Economic Growth Reduce Corruption? Theory and Evidence from Vietnam (2013, unknown): “One mechanism focuses on the civil servant’s side of the relationship, arguing that growth generates higher bureaucratic salaries, which raises the risks and reduces the incentives of partaking in petty bribery (Van Rijckeghem and Weder, 2001; Di Tella and Schargrodsky, 2003; Svensson, 2005; Gorodni”
Corruption in Developing Countries (2012, unknown): “2.3% - 4.3% of company value Gorodnichenko and Peter (2007) Ukraine Bribes received by public sector employees Estimate from market inference: residual wage differentials between the public and private sectors (consumption levels are the same in the two groups and labor Aggregate amount of bribery…”
Scholarship, Research, and Creative Work at Bryn Mawr College Scholarship, Research, and Creative Work at Bryn Mawr College (unknown): “However, the evidence from Akra suggests that large, possibly urban, entities with local economies and extensive trade and exchange networks were already in existence in this region from ca.”