Bribery: Who Pays, Who Refuses, What Are The Payoffs?

Jennifer Hunt and Sonia Laszlo

No wp792, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the payoffs to the client’s decision. We test this frame work using a new data set on bribery of Peruvian public officials by households. The theory predicts that bribery is more attractive to both parties when the client is richer, and we find empirically that both bribery incidence and value are increasing in household income. However, 65% of the relation between bribery incidence and income is explained by greater use of officials by high–income households, and by their use of more corrupt types of official. Compared to a client dealing with an honest official, a client who pays a bribe has a similar probability of concluding her business, while a client who refuses to bribe has a probability 16 percentage points lower. This indicates that service improvements in response to a bribe merely offset service reductions associated with angling for a bribe, and that clients refusing to bribe are punished. We use these and other results to argue that bribery is not a regressive tax.

Keywords: Corruption; bribery; institutions; governance. (search for similar items in EconPapers)
JEL-codes: H4 K4 O1 (search for similar items in EconPapers)
Pages: pages
Date: 2005-09-01
New Economics Papers: this item is included in nep-dev, nep-law, nep-pbe and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Related works:
Working Paper: BRIBERY: WHO PAYS, WHO REFUSES, WHAT ARE THE PAYOFFS? (2006)
Working Paper: Bribery: Who Pays, Who Refuses, What are the Payoffs? (2005)
Working Paper: Bribery: Who Pays, Who Refuses, What Are the Payoffs? (2005)
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