Corruption is Bad for Growth (Even in the United States)

Posted: 4 Nov 2008 Last revised: 20 Mar 2012

See all articles by Noel D. Johnson

Noel D. Johnson

George Mason University - Department of Economics; George Mason University - Mercatus Center

Courtney LaFountain

Government Accountability Office (GAO)

Steven Yamarik

California State University, Long Beach - Department of Economics; Henan University

Date Written: March 4, 2008

Abstract

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

Johnson, Noel D. and LaFountain, Courtney and Yamarik, Steven, Corruption is Bad for Growth (Even in the United States) (March 4, 2008). Public Choice, Vol. 147, Nos. 3-4, 2011, Available at SSRN: https://ssrn.com/abstract=1294650 or http://dx.doi.org/10.2139/ssrn.1294650

Noel D. Johnson

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

George Mason University - Mercatus Center

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

Courtney LaFountain (Contact Author)

Government Accountability Office (GAO) ( email )

441 G St., NW
Washington, DC 20548
United States

Steven Yamarik

California State University, Long Beach - Department of Economics ( email )

1250 Bellflower Blvd
Long Beach, CA 90840-4607
United States

HOME PAGE: http://www.csulb.edu/~syamarik

Henan University ( email )

85 Minglun St. Shunhe
Kaifeng, Henan 475001
China

HOME PAGE: http://cfds.henuecon.education/index.php/research/data/yes-capital-data

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