The Impact of an Unexpected Wage Cut on Corruption: Evidence from a 'Xeroxed' Exam

53 Pages Posted: 3 Jan 2013

See all articles by Oana Borcan

Oana Borcan

Göteborg University

Mikael Lindahl

Uppsala University

Andreea Mitrut

Göteborg University

Date Written: December 28, 2012

Abstract

This paper aims to understand how corruption responds to an income loss. We exploit an unexpected 25% wage cut incurred in 2010 by all Romanian public sector employees, including the public education staff. We investigate a corruptible high-stake exam taking place shortly after the wage announcement. To measure corruption we compare changes in exam outcomes from 2009 to 2010 between public and private schools, as the latter were not affected by the policy. We find that the wage loss induced better exam outcomes in public than in private schools and we attribute this difference to increased corruption by public educators.

Keywords: public educators, bribes, high-stakes exam

JEL Classification: I200, H700, J300

Suggested Citation

Borcan, Oana and Lindahl, Mikael and Mitrut, Andreea, The Impact of an Unexpected Wage Cut on Corruption: Evidence from a 'Xeroxed' Exam (December 28, 2012). CESifo Working Paper Series No. 4038. Available at SSRN: https://ssrn.com/abstract=2195506

Oana Borcan

Göteborg University ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden

Mikael Lindahl (Contact Author)

Uppsala University ( email )

Andreea Mitrut

Göteborg University ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden

HOME PAGE: http://www.hgu.gu.se/item.aspx?id=3081

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