Admission is Free Only If Your Dad is Rich! Distributional Effects of Corruption in Schools in Developing Countries

Bibliographic Data

ID19914060
AuthorsM Shahe Emran (0000-0002-4375-0958, George Washington University), Asad Islam (0000-0002-0928-0454, Monash University), Asadul Islam (0000-0001-9510-1178), Forhad Shilpi (0000-0003-0112-8340, World Bank Group)
Year2013
Publication date2013-10-01
Open AccessNo
TypeBOOK
PublisherWorld Bank, Washington, DC (PUBLISHER)
DOI10.1596/1813-9450-6671
OpenAlexW1874160311
LanguageEN
Citations received2
References cited26

In the standard model of corruption, the \n rich are more likely to pay bribes for their children's \n education, reflecting higher ability to pay. This prediction \n is, however, driven by the assumption that the probability \n of punishment for bribe-taking is invariant across \n households. In many developing countries lacking in rule of \n law, this assumption is untenable, because the enforcement \n of law is not impersonal or unbiased and the poor have \n little bargaining power. In a more realistic model where the \n probability of punishment depends on the household's \n economic status, bribes are likely to be regressive, both at \n the extensive and intensive margins. Using rainfall \n variations as an instrument for household income in rural \n Bangladesh, this paper finds strong evidence that corruption \n in schools is doubly regressive: (i) the poor are more \n likely to pay bribes, and (ii) among the bribe payers, the \n poor pay a higher share of their income. The results \n indicate that progressivity in bribes reported in the \n earlier literature may be due to identification challenges. \n The Ordinary Least Squares regressions show that bribes \n increase with household income, but the Instrumental \n Variables estimates suggest that the Ordinary Least Squares \n results are spurious, driven by selection on ability and \n preference. The evidence reported in this paper implies that \n "free schooling" is free only for the rich and \n corruption makes the playing field skewed against the poor. \n This may provide a partial explanation for the observed \n educational immobility in developing countries

Bargaining power · Demographic economics · Developing country · Econometrics · Economic growth · Economics · Enforcement · Estimation · Instrumental variable · Language change · Microeconomics · Ordinary least squares · Political science · Public economics · Punishment (psychology) · Spurious relationship · Statistics · Corruption and Economic Development · Economic Growth and Development · Income, Poverty, and Inequality · Law · Psychology

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