Unemployment – Corruption Relationship in OECD Countries: System GMM Approach

Fatih Kırşanlı
Additional contact information
Fatih Kırşanlı: Yozgat Bozok University

Business and Economics Research Journal, 2023, vol. 14, issue 1, 1-17

Abstract: Corruption, abuse of public office for private gain, is mainly found to impact macroeconomic indicators adversely in the long run. In this vein, this paper investigates the impact of corruption on unemployment in Organization of Economic Cooperation and Development (OECD) countries between 1996-2020. Utilizing World Governance Indicators (WGI) corruption data and implementing the system generalized method of moments (GMM) methodology to overcome endogeneity and reverse causality issues, the results indicate that corruption increases unemployment in all models when various variables are controlled for. The robustness checks with alternative econometric estimations (i.e., difference GMM, fixed effect, and ordinary least squares (OLS) regressions) and corruption index (i.e., Corruption Perception Index (CPI)) verify the conclusion of system GMM that higher corruption leads to higher unemployment. However, the magnitude depends on the model and specification. The results reveal that specific policies should be implemented to eliminate corruption in political and bureaucratic spheres so that the unemployment rate can be maintained around the natural rate of each country.

Keywords: Unemployment; Corruption; OECD; System GMM; Fixed Effects (search for similar items in EconPapers)
JEL-codes: D73 E02 E24 J64 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.berjournal.com/unemployment-corruption ... -system-gmm-approach Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:buecrj:0621

Access Statistics for this article

Business and Economics Research Journal is currently edited by Adem Anbar

More articles in Business and Economics Research Journal from Uludag University, Faculty of Economics and Administrative Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Adem Anbar ().