NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Corruption

Abhijit Banerjee, Sendhil Mullainathan, Rema Hanna

NBER Working Paper No. 17968
Issued in April 2012
NBER Program(s):   POL

In this paper, we provide a new framework for analyzing corruption in public bureaucracies. The standard way to model corruption is as an example of moral hazard, which then leads to a focus on better monitoring and stricter penalties with the eradication of corruption as the final goal. We propose an alternative approach which emphasizes why corruption arises in the first place. Corruption is modeled as a consequence of the interaction between the underlying task being performed by bureaucrat, the bureaucrat's private incentives and what the principal can observe and control. This allows us to study not just corruption but also other distortions that arise simultaneously with corruption, such as red-tape and ultimately, the quality and efficiency of the public services provided, and how these outcomes vary depending on the specific features of this task. We then review the growing empirical literature on corruption through this perspective and provide guidance for future empirical research.

download in pdf format
   (246 K)

email paper

This paper is available as PDF (246 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17968

Published: “Corruption,” (with Rema Hanna and Sendhil Mullainathan), The Handbook of Organizational Economics. Ed. Robert Gibbons and John Roberts. Princeton University Press, 1109-­‐1147, 2012.

Users who downloaded this paper also downloaded these:
Shleifer and Vishny w4372 Corruption
Cheung, Rau, and Stouraitis w17981 How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide
Olken w11753 Monitoring Corruption: Evidence from a Field Experiment in Indonesia
Olken w12428 Corruption Perceptions vs. Corruption Reality
Mocan w10460 What Determines Corruption? International Evidence from Micro Data
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us