Dynamic Relationship between Corruption and Youth Unemployment : Empirical Evidences from a System GMM Approach
This paper addresses the causal relationship between corruption and youth unemployment from two different perspectives. The discussion starts by asking how the corruption practices within government institutions that encourage the payment of bribes...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2016/09/26825071/dynamic-relationship-between-corruption-youth-unemployment-empirical-evidences-system-gmm-approach http://hdl.handle.net/10986/25158 |
| Summary: | This paper addresses the causal
relationship between corruption and youth unemployment from
two different perspectives. The discussion starts by asking
how the corruption practices within government institutions
that encourage the payment of bribes to access the job
opportunities contribute to reducing the efficiency of the
resources (labor force) allocations. The resources are
diverted from the most productive economic sectors toward
those (usually less efficient economic sectors) where
self-motivated officials have more discretionary power in
selecting the candidates who are less qualified for the job.
The challenge is to examine how bribed bureaucrats are more
concerned by their own personal interests at the expense of
national welfare when positively reacting to the highest
bribe payers. Second question addressed is why the resulting
mismatching between supply and demand in the labor market
tends to sustain its underlying causes (i.e., bribes) by
giving more incentive to new agents and economic actors to
adopt these practices. Using a system GMM approach that
simultaneously account for the dynamic effect between
perceived bribery among officials and the youth unemployment
rates, the paper finds that, after controlling for various
macroeconomic and institutional factors, the development of
corruption practices tend to increase the unemployment rate
among youth and educated job seekers which in turn
contribute to sustain those unlawful practices by forcing
the latter to bribe rent seeking government officials in
order to secure a job. |
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