public sector pay and corruption measuring bribery from micro data abstract this study provides the first systematic measure of bribery using micro level data on reported earnings household spending and asset holdings we use the compensating differential framework and the estimated sectoral gap in reported earnings and expenditures to identify the size of unobserved unofficial compensation i e bribes of public sector employees in the case of ukraine we find that public sector employees receive 24 32 less wages than their private sector counterparts the gap is particularly large at the top of the wage distribution at the same time workers in both sectors have essentially identical level of consumer expenditures and asset holdings that unambiguously indicate the presence of non reported compensation in the public sector using the conditions of labor market equilibrium we develop an aggregate measure of bribery and find that the lower bound estimate of the extent of bribery in ukraine is between 460 million and 580 million u s dollars 0 9 1 2 of ukraine s gdp in 2003

the shape of public choice to come some predictions and advice in the normal course of events elders are sometimes called upon to reflect on the past while the more youthful set about deciding the future for the most part i shall honor the dictum but offer some unsolicited advice on what needs to be done and be so bold as to predict these suggestions will be acted upon a kind of self fulfilling prophecy of course the advice may be rejected or ignored what then

counterfactual decomposition of changes in wage distributions using quantile regression we propose a method to decompose the changes in the wage distribution over a period of time in several factors contributing to those changes the method is based on the estimation of marginal wage distributions consistent with a conditional distribution estimated by quantile regression as well as with any hypothesized distribution for the covariates comparing the marginal distributions implied by different distributions for the covariates one is then able to perform counterfactual exercises the proposed methodology enables the identification of the sources of the increased wage inequality observed in most countries specifically it decomposes the changes in the wage distribution over a period of time into several factors contributing to those changes namely by discriminating between changes in the characteristics of the working population and changes in the returns to these characteristics we apply this methodology to portuguese data for the period 1986 1995 and find that the observed increase in educational levels contributed decisively towards greater wage inequality copyright 2005 john wiley sons ltd

the power of negative thinking corruption perception and willingness to bribe in ukraine this study provides an empirical analysis of the association between corruption perception and the willingness to offer bribes as well as of the influence of different sources of information on corruption perception in the ukraine the higher the perceived corruption in an organization the more probable it is that a person dealing with that organization will offer a bribe therefore supporting corruption since corruption scandals in ukraine seldom result in legal action information about corruption in the mass media might actually encourage people to give bribes this study found that corruption perception is one of the key factors in giving a bribe and that its positive negative effects strongly depend on institutions and government policies

military expenditures and bureaucratic competition for rents this paper has provided empirical evidence on the relationship between transfers to the military and the degree of political competition in a country it has been argued that in both democratic and autocratic rent seeking societies the military may have a significant advantage in capturing government transfers in democratic societies the role of the military as guardian of national security puts it in a unique position to seek transfers as a result military elites in these countries have been quite successful in influencing the political system to increase rents to them and members of their group in dictatorships violence is an important rent seeking behavior since the military has a comparative advantage in violence it has emerged as the dominant rent seeking interest group in these countries as a result military groups dominate resource allocations in most politically unstable countries

rent seeking and institutional stability in developing countries although developing countries are most often associated with institutional instability most are fairly stable and may be considered extremely stable if one takes into account the fact that policies adopted by many of these nations are highly inefficient in a large number of cases post independence economic policies adopted by developing countries have resulted in very slow stagnant or even negative economic growth in more advanced and democratic countries such policies would prevent the reelection of leaders although a small fraction of the population enjoys an extremely high standard of living the majority of the population in developing countries have not experienced any significant gains in their standard of living since independence yet while there have been several coups and attempted coups many governments have remained relatively stable with some leaders remaining in power for over a quarter of a century in other cases leaders have served until their death and successors have continued uninterrupted with remarkable stability even when such leaders adopt what may be considered extremely inefficient policies why then have many institutions remained so stable the present paper argues that the stability observed in many developing countries is a result of a rent seeking equilibrium between well organized interest groups in the population that compete for wealth transfers generated by the relatively weaker and more poorly organized groups in this equilibrium the military is one of the most important interest groups that benefit from the transfers because rent seeking in these countries often involves violence the

a note on the measurement of equity duration and convexity the appropriate measure of equity duration and by extension convexity is a controversial matter in 1986 leibowitz presented empirical duration measures that are considerably shorter than those derived from a traditional dividend discount model a class of dividend discount models developed by hurley and johnson is used to try to reconcile the difference the values derived for equity duration are intermediate between the leibowitz and traditional measures these models overcome the standard criticism of dividend discount models by allowing for realistic patterns of future dividend growth corresponding models of equity convexity developed by johnson are used to derive equity convexity

a one factor model of interest rates and its application to treasury bond options 1990 a one factor model of interest rates and its application to treasury bond options financial analysts journal vol 46 no 1 pp 33 39

shadow economies size causes and consequences using various methods the size of the shadow economy in 76 developing transition and oecd countries is estimated average size varies from 12 percent of gdp for oecd countries to 23 percent for transition countries and 39 percent for developing countries increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy especially in oecd countries according to some findings corruption has a positive impact on the size of the shadow economy and a growing shadow economy has a negative effect on official gdp growth

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

on the inefficient extraction of rents by dictators most countries in the world are governed by autocracy that is some form of one man rule be it monarchy or dictatorship dictatorship is a prevalent form of autocracy with a majority of the world s population living under this type of rule yet when analyzed from an economic point of view dictatorships do not appear to be efficient they are not efficient in social terms and more strangely they do not appear to be efficient from the dictator s viewpoint take one example in bulandia a fictitious country a general from the army overthrows the government and establishes himself as the supreme leader he promptly places those who helped him in the revolution in key government positions as well as granting them favors in the business world such positions and favors are considered rewards for supporting the revolution they can be considered a cost of the revolution suppose the general appoints his brother an air force colonel as head of the newly established national mining industry his brother having no background in business or engineering is to say the least not the most qualified man for the job but it is assumed that he must be granted the position in order to maintain a stable coalition he must be paid off if this is the only problem the payoff why does the dictator use such an inefficient method of pay off why doesn t he for example have the industry managed by a foreign mining company which can actually generate profits and then use these profits to

a modified switching regression model for earnings differentials between the public and private using dutch 1986 data the wage differentials between public sector and private sector workers are investigated by employing a variation of the switching regression model this model imposes fewer identification restrictions on the parameters of the model than the standard switching regression model the estimation results show that some categories of public sector workers earn substantially less than private sector workers copyright 1993 by mit press

bureaucratic corruption and the rate of temptation do wages in the civil service affect corruption and by how much abstract this paper presents what is to our knowledge the first empirical estimate of the effect of pay in the civil service on corruption first we show that theory is ambiguous on the relationship between civil service pay and corruption then we examine the issue using a new data set on wages for low income countries we find evidence of a statistically and economically significant relationship between relative civil service pay and corruption in regressions based on cross country averages where we control for a wide array of variables the relationship implies that a rather large increase in wages is required to eradicate corruption solely by raising wages

political systems and distortions an empirical study this paper studies empirically why price distortions are more prevalent in some countries than in others we find no significant difference between democracies and dictatorships but frequent regime changes reduce distortions political systems factional subordinate that encourage redistributive activities rda tend to have more distortions allowing for different effects of rda in democracies and dictatorships there is a positive and significant effect of rda on distortions in dictatorships in democracies distortions destroying lobbying seems more important since no significant relation between rda and distortions can be found

do workers accept lower wages in exchange for health benefits compensating wage theory predicts that workers receiving more generous fringe benefits are paid a lower wage than comparable workers who prefer fewer fringe benefits this study tests this prediction for employer provided health insurance by modeling the wages of married women employed full time in the labor market husband s union status husband s firm size and husband s health coverage through his job are used as instruments for his wife s own employer health insurance benefits the estimates suggest wives with own employer health insurance accept a wage about 20 lower than what they would have received working in a job without benefits

public private wage differentials in haiti do public servants earn a rent abstract this study uses a newly collected data set on haiti where data are very limited to assess how individuals are selected into the public vs private sectors and to estimate public private sector wage differentials the central question is whether or not public servants are earning a rent the estimation procedure is an extension of heckman s 1979 sample selection technique to the case where two selection rules generate the sample the procedure first estimates by bivariate probit analysis the probability of employment in the public or private sector and then for those in the public sector the probability of employment in the state owned enterprises soes vs public administration wage functions are then estimated for all three sectors using the inverse mills ratios from reduced form probits selectivity bias is found to exist in one sector soes correction for this bias in the wage equations lowers the wage differentials between the soe and the private sector and the soe and public administration as is clearly demonstrated by the oaxaca decomposition of these estimated mean differentials nevertheless the corrected findings still indicate that the public sector especially the soes earn a sizable rent

the heckman correction for sample selection and its critique this paper gives a short overview of monte carlo studies on the usefulness of heckman s 1976 1979 two step estimator for estimating selection models such models occur frequently in empirical work especially in microeconometrics when estimating wage equations or consumer expenditures it is shown that exploratory work to check for collinearity problems is strongly recommended before deciding on which estimator to apply in the absence of collinearity problems the full information maximum likelihood estimator is preferable to the limited information two step method of heckman although the latter also gives reasonable results if however collinearity problems prevail subsample ols or the two part model is the most robust amongst the simple to calculate estimators

nonwage benefits in a simultaneous model of wages and hours labor supply functions of young females this article argues that the negative relationship between weekly hours worked and the gross hourly wage rate is due to the provision of fringe benefits as the total weekly wage increases employers and employees avoid taxation by substituting wages with nontaxable nonwage benefits i produce a wage that incorporates the benefit effects and estimate the corresponding labor supply elasticities an estimator is presented for the wage hours market locus and the structural labor supply function an empirical application indicates that an estimated negative labor supply elasticity associated with the observed gross wage is reversed when the adjusted wage is employed

government in transition abstract the speed of economic reforms is not the only important determinant of the success of the transition to a market economy the transition of government from a communist state to an institution supporting a market economy is as critical survey evidence shows that russia lags significantly behind poland in the transition of its government which may account for its inferior economic performance despite adopting similar economic reforms i argue that the lack of turnover of old communist politicians and the creation of inappropriate electoral and fiscal incentives for these politicians may account for the poor performance of the russian government and suggest some strategies for improving the situation