Corruption is Bad for Growth (Even in the United States)
Noel D. Johnson
George Mason University - Department of Economics; George Mason University - Mercatus Center
Government Accountability Office (GAO)
California State University, Long Beach - Department of Economics
March 4, 2008
Public Choice, Vol. 147, Nos. 3-4, 2011
We estimate the impact of corruption on growth of output per worker in U.S. states. We improve on existing studies of the cost of corruption by using a better specified empirical model, focusing on a study population that is less likely to be affected by parameter heterogeneity, and controlling for endogeneity using political variables to instrument for corruption. We find that corruption plays a significant and causal role in lowering growth and investment across the states.
Keywords: corruption, investment, economic growth
JEL Classification: D74, F51, O10Accepted Paper Series
Date posted: November 4, 2008 ; Last revised: March 20, 2012
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