Effects of Public Sector Wages on Corruption : Wage Inequality Matters

The paper uses a new country-level, panel data set to study the effect of public sector wages on corruption. The results show that wage inequality in the public sector is an important determinant of the effectiveness of anti-corruption policies. In...

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Main Authors:	Demirguc-Kunt, Asli, Lokshin, Michael, Kolchin, Vladimir
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2021
Subjects:	PUBLIC SECTOR WAGES CORRUPTION ANTICORRUPTION PUBLIC FINANCIAL MANAGEMENT CIVIL SERVICE REFORM PUBLIC-PRIVATE WAGE DIFFERENTIAL
Online Access:	http://documents.worldbank.org/curated/en/387481619624669061/Effects-of-Public-Sector-Wages-on-Corruption-Wage-Inequality-Matters http://hdl.handle.net/10986/35521

id	okr-10986-35521
recordtype	oai_dc
spelling	okr-10986-355212022-09-20T00:09:48Z Effects of Public Sector Wages on Corruption : Wage Inequality Matters Demirguc-Kunt, Asli Lokshin, Michael Kolchin, Vladimir PUBLIC SECTOR WAGES CORRUPTION ANTICORRUPTION PUBLIC FINANCIAL MANAGEMENT CIVIL SERVICE REFORM PUBLIC-PRIVATE WAGE DIFFERENTIAL The paper uses a new country-level, panel data set to study the effect of public sector wages on corruption. The results show that wage inequality in the public sector is an important determinant of the effectiveness of anti-corruption policies. Increasing the wages of public officials could help reduce corruption in countries with low public sector wage inequality. In countries where public sector wages are highly unequal, however, raising the wages of government employees could increase corruption. These results are robust to a wide range of empirical model specifications, estimation methods, and distributional assumptions. The relation persists when controlling for latent omitted variables, using the share of contracts in the private sector as an instrument for the public-private wage differential. Combining increases in public sector wages with policies affecting the wage distribution could help policy makers design cost-effective programs to reduce corruption in their countries. 2021-04-29T14:42:50Z 2021-04-29T14:42:50Z 2021-04 Working Paper http://documents.worldbank.org/curated/en/387481619624669061/Effects-of-Public-Sector-Wages-on-Corruption-Wage-Inequality-Matters http://hdl.handle.net/10986/35521 English Policy Research Working Paper;No. 9643 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	PUBLIC SECTOR WAGES CORRUPTION ANTICORRUPTION PUBLIC FINANCIAL MANAGEMENT CIVIL SERVICE REFORM PUBLIC-PRIVATE WAGE DIFFERENTIAL
spellingShingle	PUBLIC SECTOR WAGES CORRUPTION ANTICORRUPTION PUBLIC FINANCIAL MANAGEMENT CIVIL SERVICE REFORM PUBLIC-PRIVATE WAGE DIFFERENTIAL Demirguc-Kunt, Asli Lokshin, Michael Kolchin, Vladimir Effects of Public Sector Wages on Corruption : Wage Inequality Matters
relation	Policy Research Working Paper;No. 9643
description	The paper uses a new country-level, panel data set to study the effect of public sector wages on corruption. The results show that wage inequality in the public sector is an important determinant of the effectiveness of anti-corruption policies. Increasing the wages of public officials could help reduce corruption in countries with low public sector wage inequality. In countries where public sector wages are highly unequal, however, raising the wages of government employees could increase corruption. These results are robust to a wide range of empirical model specifications, estimation methods, and distributional assumptions. The relation persists when controlling for latent omitted variables, using the share of contracts in the private sector as an instrument for the public-private wage differential. Combining increases in public sector wages with policies affecting the wage distribution could help policy makers design cost-effective programs to reduce corruption in their countries.
format	Working Paper
author	Demirguc-Kunt, Asli Lokshin, Michael Kolchin, Vladimir
author_facet	Demirguc-Kunt, Asli Lokshin, Michael Kolchin, Vladimir
author_sort	Demirguc-Kunt, Asli
title	Effects of Public Sector Wages on Corruption : Wage Inequality Matters
title_short	Effects of Public Sector Wages on Corruption : Wage Inequality Matters
title_full	Effects of Public Sector Wages on Corruption : Wage Inequality Matters
title_fullStr	Effects of Public Sector Wages on Corruption : Wage Inequality Matters
title_full_unstemmed	Effects of Public Sector Wages on Corruption : Wage Inequality Matters
title_sort	effects of public sector wages on corruption : wage inequality matters
publisher	World Bank, Washington, DC
publishDate	2021
url	http://documents.worldbank.org/curated/en/387481619624669061/Effects-of-Public-Sector-Wages-on-Corruption-Wage-Inequality-Matters http://hdl.handle.net/10986/35521
_version_	1764483207750746112

Effects of Public Sector Wages on Corruption : Wage Inequality Matters

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