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Corruption and Social Interaction: Evidence from China

22 Pages Posted: 8 Feb 2011  

Bin Dong

Queensland University of Technology

Benno Torgler

Queensland University of Technology; CREMA; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: February 7, 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.

Keywords: Corruption, Social Interaction, China

JEL Classification: K42, D72, D64, O17, J24

Suggested Citation

Dong, Bin and Torgler, Benno, Corruption and Social Interaction: Evidence from China (February 7, 2011). FEEM Working Paper No. 9.2011. Available at SSRN: https://ssrn.com/abstract=1756843 or http://dx.doi.org/10.2139/ssrn.1756843

Bin Dong (Contact Author)

Queensland University of Technology ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Benno Torgler

Queensland University of Technology ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

CREMA

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

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