Corrosive effects of corruption on human capital and aggregate productivity

Kanat Abdulla

Kyklos, 2021, vol. 74, issue 4, 445-462

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.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://doi.org/10.1111/kykl.12279

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:bla:kyklos:v:74:y:2021:i:4:p:445-462

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0023-5962

Access Statistics for this article

Kyklos is currently edited by Rene L. Frey

More articles in Kyklos from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().