Corruption and Social Interaction: Evidence from China
Queensland University of Technology
Queensland University of Technology; CREMA; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
February 7, 2011
FEEM Working Paper No. 9.2011
We explore theoretically and empirically whether social interaction, including local and global interaction, influences the incidence of corruption. We first present an interaction-based model on corruption that predicts that the level of corruption is positively associated with social interaction. Then we empirically verify the theoretical prediction using within-country evidence at the province-level in China during 1998 to 2007. Panel data evidence clearly indicates that social interaction has a statistically significantly positive effect on the corruption rate in China. Our findings, therefore, underscore the relevance of social interaction in understanding corruption.
Number of Pages in PDF File: 22
Keywords: Corruption, Social Interaction, China
JEL Classification: K42, D72, D64, O17, J24
Date posted: February 8, 2011
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