Officials Versus Thieves: Is Public or Private Expropriation More Harmful to Small Firms?

Sarah Pearlman

Journal of Development Studies, 2014, vol. 50, issue 6, 773-788

Abstract: Corruption and crime are factors that regularly affect firms, yet few papers compare the two impacts. This is largely due to a lack of data, something I overcome using recent surveys of microenterprises in Mexico. After instrumenting for individual firm-level incidence, I find that thieves are much more harmful to microenterprises than officials. The incidence of robbery and extortion is associated with declines in income and employees, while the incidence of bribery and fines are associated with increases in both. This highlights that crime can be a larger deterrent to firm growth than corruption in certain environments.

Date: 2014
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DOI: 10.1080/00220388.2014.895819

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