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Corruption and Social Interaction: Evidence from ChinaBin DongQueensland University of Technology Benno TorglerQueensland University of Technology; CREMA; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) February 7, 2011 FEEM Working Paper No. 9.2011 Abstract: 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 working papers seriesDate posted: February 8, 2011Suggested CitationContact Information
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