Full Citation

Title: Corrosive effects of corruption on human capital and aggregate productivity

Citation Type: Journal Article

Publication Year: 2021

ISBN:

ISSN: 0023-5962

DOI: 10.1111/kykl.12279

NSFID:

PMCID:

PMID:

Abstract: Corruption has been shown to affect a variety of observed human capital inputs, such as health status, school enrollment, and student dropout rates. However, to the best of our knowledge, the question of how corruption affects unobserved skills has received little attention. This study investigates the effect of corruption on unobserved human capital, measured from the earnings of immigrants, using the U.S. census data for the period 1980–2000. In the human capital model built in the paper, corruption enters the budget constraint of an individual as a cost of the accumulation of unobservable skills. Using data on immigrants and the theoretical model motivating an empirical analysis, the study reveals how corruption impacts the stock of human capital across countries. According to the prediction deriving from the empirical analysis, corruption has a negative effect on the stocks of human capital. The counterfactual findings using the calibrated model suggest that the elimination of corruption increases aggregate output by 18–21% on average.

Url: https://doi.org/10.1111/kykl.12279

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Authors: Abdulla, Kanat

Periodical (Full): Kyklos

Issue: 4

Volume: 74

Pages: 445-462

Data Collections: IPUMS USA, IPUMS International

Topics: Crime and Deviance, Labor Force and Occupational Structure, Migration and Immigration

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