Corruption is Bad for Growth (Even in the United States)
Posted: 4 Nov 2008 Last revised: 20 Mar 2012
Date Written: March 4, 2008
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, O10
Suggested Citation: Suggested Citation