The marginal rate of corruption in public programs: Evidence from India

Paul Niehaus and Sandip Sukhtankar

Journal of Public Economics, 2013, vol. 104, issue C, 52-64

Abstract: Optimal fiscal policy depends on the marginal benefits of public spending. In developing countries corrupt officials often embezzle funds, so optimal policy should reflect marginal corruption. We analyze marginal corruption in the context of a statutory wage increase in India's employment guarantee scheme. Strikingly, workers received none of the increase even though initially they were on average overpaid. The data are inconsistent with theories of “voice” in which the threat of complaints limits corruption, but consistent with theories of “exit” in which outside options in the private sector limit how much rent officials can extract.

Keywords: Corruption; Leakage; Voice; Exit; Public programs (search for similar items in EconPapers)
JEL-codes: D61 D73 H11 H53 I38 K42 O10 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (65)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:104:y:2013:i:c:p:52-64

DOI: 10.1016/j.jpubeco.2013.05.001

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