measuring program impacts on earnings and employment do unemployment insurance wage reports from employers agree with surveys of individuals this article attempts to determine whether wage records reported by employers to state unemployment insurance ui agencies provide a valid alternative to more costly retrospective sample surveys o

reducing bureaucratic corruption interdisciplinary perspectives on what works abstract this article offers the first comprehensive review of the interdisciplinary state of knowledge regarding anti corruption policies with a particular focus on reducing corruption among civil servants drawing on the work of economists political scientists sociologists and anthropologists we examine seven policy categories 1 rewards and penalties 2 monitoring 3 restructuring bureaucracies 4 screening and recruiting 5 anti corruption agencies 6 educational campaigns and 7 international agreements notably rigorous empirical evaluation is lacking for the majority of commonly prescribed anti corruption policies nevertheless we find growing evidence of the effectiveness of policies based on monitoring including anti corruption audits and e governance in addition adequate civil service wages seem to be a necessary but insufficient condition for control of corruption an emerging skepticism regarding the effectiveness of anti corruption agencies also is apparent in the literature we conclude with broader lessons drawn from our review such as the recognition that when corruption is a systemic problem it cannot be treated in the long term with individual level solutions

accuracy of response in labor market surveys evidence and implications this paper examines the extent of response errors in labor market survey data and explores the implications of such errors for economic analysis explicitly examined are responses to questions on industry occupation union status hours worked and wages analyses are based on two sources 1 a special supplement to the january 1977 current population survey that obtained data from workers and their employers and 2 an exact match of workers and their employers interviewed in the employment opportunity pilot project survey the dual nature of these surveys provides a basis for analyzing the effect of response error on a variety of economic analyses including the trade off between wages and risk the wage impact of unionism and the sensitivity of wage determination models to alternative responses to earnings questions

bureaucracy infrastructure and economic growth evidence from u s cities during the progressive era recent work in the sociology of economic development has emphasized the establishment of a professional bureaucracy in place of political appointees as an important component of the institutional environment in which private enterprise can flourish i hypothesize that establishment of such a bureaucracy will lengthen the period that public decision makers are willing to wait to realize the benefits of expenditures leading to allocation of a greater proportion of government resources to long gestation period projects such as infrastructure this hypothesis can be tested using data generated by a natural experiment in the early part of this century when a wave of municipal reform transformed the governments of many u s cities controlling for city and time effects adoption of civil service is found to increase the share of total municipal expenditure allocated to road and sewer investment other estimates imply that this increased share raises the growth rate of city manufacturing employment by one half percent per year this abstract was borrowed from another version of this item

the resource curse revisited governance and natural resources the paper analyzes the impact of natural resource abundance on selected governance indicators we use a panel data set with observations on a large number of countries over an extended period of time and employ an instrumental variable technique to account for endogeneity the results show that exports of natural resources have above all led to an increase in corruption this result is robust to both different model specifications and an alternative indicator for natural resource abundance for other governance indicators such as law and order and bureaucratic quality we either find no results or results that lack robustness

public sector wages and bureaucratic quality evidence from latin america the purpose of this paper is to present evidence on public private wage differential for a sample of latin american countries and to discuss the relationship between public private wage differentials and bureaucratic quality in the region the paper starts by estimating public private wage differentials for a sample of 17 latin american countries covering 88 percent of the population of the region next the paper looks at the relationship between bureaucratic quality and public private wage differentials and finds that while there is no correlation between average public sector wages and bureaucratic quality there is a positive correlation between bureaucratic quality and the degree

the role of wages and auditing during a crackdown on corruption in the city of buenos aires abstract we study the prices paid for basic inputs during a crackdown on corruption in the public hospitals of the city of buenos aires argentina during 1996 97 we find a well defined negative effect on the measures used to capture corruption prices paid by hospitals for basic homogeneous inputs decrease by 15 percent during the first 9 months of the crackdown after this period prices increase but they are still 10 percent lower than those prevailing before the crackdown relative to the precrackdown period higher wages play no role in inducing lower input prices when audit intensity can be expected to be maximal during the first phase of the crackdown but have a negative and well defined effect when audit intensity takes intermediate levels the last phase of the crackdown controlling for fixed effects we find that the wage elasticity of input prices exceeds 20 these results are consistent with the standard model of bribes of gary becker and george stigler

bureaucrats and short term politics this paper proposes a simple probabilistic voting model where the society consists of three groups of voters belonging to different generations since the youngest generation is excluded from participating in elections the political process results in an allocation of public expenditures that is shifted towards public consumption we show that the influence of bureaucrats who favor an excessive supply of public goods increases investment expenditures and limits the leeway of politicians to capture rents for themselves finally we discuss the conditions under which the impact of bureaucrats is welfare enhancing

a life course trajectory framework for understanding the intracohort pattern of wage inequality much research has been devoted to cross sectional and intercohort patterns of wage inequality but relatively little is known about the mechanisms for the intracohort pattern of wage inequality to fill this intellectual gap this article establishes a life course trajectory lct framework for understanding the intracohort pattern of wage inequality first the author proposes and conceptualizes three essential properties of the lct framework random variability trajectory heterogeneity and cumulative advantage that are used to establish a mathematical formalization of the lct framework both the conceptualization and the formalization imply that intracohort wage inequality will increase over the life course due to random variability trajectory heterogeneity and cumulative advantage finally the author combines the lct framework with the multilevel growth curve model then applies the model to data from the nlsy79 and finds support for the significance of random variability trajectory heterogenei

bureaucratic capacity delegation and political reform thecentraltensionmotivatingcontemporarytheories of delegation from politicians to bureaucrats lies in the potential conflict between the value of bureaucratic expertise on one hand and the desire for political control on the other this tension is well known and has been debated at least since weber s classic work on bureaucracy modern bureaucracies are staffed with individuals who by virtue of rational bureaucratic organization are highly skilled policy experts who in principle should be able to help less knowledgeable politicians achieve their goals however the very skills and expertise that bureaucrats enjoy create the possibility that bureaucrats will usurp the rightful role of politicians in policymaking processes because the way this tension is resolved determines the ultimate compatibility of democracy and bureaucracy existing theories of delegation typically focus on understanding how and to what extent politicians can resolve it 1 in many contexts particularly developing democracies bureaucracy does not fit the weberian characteristics that are assumed in the existing delegation literature the bureaucracies may be staffed with individuals who lack the personal capacity to execute orders effectively the organizational structure may lead to breakdowns within bureaucratic hierarchies making it difficult for senior administrators to control their subordinates departments and ministries may lack basic budgets and resources to undertake implementation actions they may suffer from incentives for

why don t poor countries catch up a cross national test of an institutional explanation early neoclassical analyses predicted that poor countries would grow faster than wealthy countries because of technological advances and diminishing returns to capital in the latter the reverse has occurred poor countries are falling back rather than catching up we suggest here that deficient institutions underlie this divergence employing various indicators of institutional quality including the rule of law the pervasiveness of corruption and the risk of expropriation and contract repudiation we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place jel o00 o10

bureaucracy and growth a cross national analysis of the effects of weberian state structures on economic growth the role of bureaucratic authority structures in facilitating economic growth has been a sociological concern since max weber s classic contributions almost 100 years ago using a recent and original data set we examine the characteristics of core state economic agencies and the growth records of a sample of 35 developing countries for the 1970 1990 period our weberianness scale offers a simple measure of the degree to which these agencies employ meritocratic recruitment and offer predictable rewarding long term careers we find that these weberian characteristics significantly enhance prospects for economic growth even when we control for initial levels of gdp per capita and human capital our results imply that weberianness should be included as a factor in general models of economic growth they also suggest the need for more attention by policymakers to building better bureaucracies and more research by social scientists on variations in how state bureaucracies are organized

the impact of incarceration on wage mobility and inequality a life course perspective on crime indicates that incarceration can disrupt key life transitions life course analysis ofoccupations finds that earnings mobility depends on stable employment in career jobs these two lines of research thus suggest that incarceration reduces ex inmates access to the steady jobs that usually produce earnings growth among young men consistent with this argument evidence for slow wage growth among ex inmates is provided by analysis of the national longitudinal survey of youth because incarceration is so prevalent one quarter of black non college males in the survey were interviewed between 1979 and 1998 while in prison or jail the effect of imprisonment on individual wages also increases aggregate race and ethnic wage inequality

political parties clientelism and bureaucratic reform the challenge of public administration reform is well known politicians often have little interest in the efficient implementation of government policy using new data from 439 world bank public sector reform loans in 109 countries we demonstrate that such reforms are significantly less likely to succeed in the presence of non programmatic political parties earlier research uses evidence from a small group of countries to conclude that clientelistic politicians resist reforms that restrict their patronage powers we support this conclusion with new evidence from many countries allowing us to rule out alternative explanations including the effect of electoral and political institutions we also examine reforms that have not been the subject of prior research those that make public sector financial management more transparent here we identify a second mechanism through which non programmatic parties undermine public sector reform clientelistic politicians have weaker incentives to exercise oversight of policy implementation by the executive branch

corruption in public service delivery an experimental analysis abstract to improve our understanding of corruption in service delivery we use a newly designed game that allows us to investigate the effects of the institutional environment on the behavior of service providers and their monitors we focus on the effect of four different factors whether monitors are accountable to the service recipients the degree of observability of service providers effort the providers wages and the providers professional norms in accordance with theory we find that service providers perform better when monitors are elected by service recipients and when their effort is more easily observed however there is only weak evidence that service providers perform better when paid more monitors are more vigilant when elected and when service providers are paid more playing the game with ethiopian nursing students we also find that those with greater exposure to the ethiopian public health sector perform less well either as provider or as monitor when the experiment is framed as a public health provision scenario suggesting that experience and norms affect behavior

lessons from the u s unemployment insurance experiments recent social experiments have evaluated two reforms of the unemployment insurance ui system reemployment bonuses and job search programs the bonus experiments show that economic incentives affect the length of ui receipt and provide weak evidence that an earlier return to work does not decrease earnings the experiments do not show the favorability of a permanent bonus program as they ignore its effect on the number of the claimants the job search experiments test several more promising reforms nearly all of the combinations of services and increased enforcement reduce ui receipt and have favorable cost benefit analyses earnings often increase though the estimates are imprecise

transferable lessons re examining the institutional prerequisites of east asian economic policies competing theories of east asian economic policy share the assumption that a highly capable coherent economic bureaucracy closely connected to but still independent of the business community has been an essential institutional prerequisite for successful policy formation and implementation in east asia these institutional prerequisites were constructed in a variety of concrete forms with great difficulty and imperfect results as long as the idea of transferable lessons is understood as an invitation to indigenous innovation that takes advantage of the underlying analytical logic of east asian institutions other countries can reap important benefits from east asia s experience

resource curse or not a question of appropriability this thesis presents three self contained essays focusing on empirical questions in growth and development economics each article addresses specific questions on why countries perform differently in particular i analyse the effect of democracy on economic development the relationship between natural resources and growth and the efficiency of foreign development assistance in the first essay democracy consolidation and growth i analyse the effect of democracy on economic growth in this context i argue that an important aspect to consider is how consolidated political systems are put simply i find that it is not only a question of how democratic countries are but also how long they have been democratic in other words economic performance tends to improve with the duration of uninterrupted democracy the performance of autocracies on the other hand tends to deteriorate over time however for newly established political systems there seems to be a cost of being democratic this implies that democracies only bear their fruit after some time the analysis has important policy implications to overcome initial straits international assistance focused on democratic consolidation may be important and a very good investment in fostering long run development the second essay resource curse or not a question of appropriability together with anne boschini and jesper roine is concerned with the relation between natural resources and economic development for most laymen as well as for most economists it would seem reasonable that countries richly endowed in natural resources also benefit from this wealth however a large literature has found a systematic negative effect of natural resource abundance on economic growth we suggest that this so called resource curse is not determined by resource endowments alone but rather by the interaction between the type of resources a country possesses and the quality of institutions in the country this combination of factors determines what we call the appropriability of a resource the concept of appropriability captures the likelihood of natural resources leading to rentseeking corruption or conflicts which in turn will harm economic development our results suggest that if institutions are good enough the curse may be turned into a blessing this may explain why some countries such as norway and botswana tend to benefit from their resources while others such as angola and sierra leone do not the third and final essay of this thesis foreign sectoral aid fungibility growth and poverty reduction is a contribution to the aid efficiency literature which is concerned with the question of whether aid helps or hinders economic development foreign development assistance is often targeted on specific public expenditure sectors if this aid is not used in the sector for which it was granted e g health education it is said to be fungible and donors may end up financing something completely different from what they intended e g military expenditures the major concern about sectoral fungibility is that the alternative use of aid may be less productive or less socially useful however measuring fungibility is not sufficient to determine whether foreign sectoral aid fungibility is actually harmful what is important is how the funds treated as fungible are used the essay starts by obtaining estimates of fungibility for 57 countries the results suggest that sectoral aid is indeed largely treated as fungible by recipient countries next to assess the economic and health effects of fungibility these estimates are incorporated into an empirical model of aid and growth as well as into a model of aid and infant mortality altogether i find no evidence of more fungible sectoral aid leading to worse performance

corruption in russia abstractwe analyze the determinants of corruption in russia using law enforcement data on corruption incidents for a panel of 79 russian regions for the period 2004 13 we find that the relative salaries of bureaucrats determine corruption levels corruption declines as relative salaries rise yet at strongly diminishing rates furthermore we show that even very limited media freedom helps to curtail corruption other important determinants are the strength of law enforcement education levels and unemployment rates

is subsidized employment cost effective for welfare recipients experimental evidence from seven state demonstrations this paper examines the benefits and costs of training and subsidized employment provided to welfare recipients in demonstration programs in seven states a classical experimental design is used to estimate the effect of these demonstrations on earnings and welfare benefits over 33 months following program entry both effects are substantial and in some cases long lived when combined with data on program costs these findings indicate that while not always cost effective for taxpayers subsidized employment for welfare recipients does convey positive net benefits to participants and to society as a whole

incarceration length employment and earnings this paper estimates effects of increases in incarceration length on employment and earnings prospects of individuals after their release from prison i utilize a variety of research designs including controlling for observable factors and using instrumental variables for incarceration length based on randomly assigned judges with different sentencing propensities the results show no consistent evidence of adverse labor market consequences of longer incarceration length using any of the analytical methods in either the state system in florida or the federal system in california

institutions and government controls abstract this paper develops a model of government policy toward industrial control and regulation that sheds light on the determinants of differential country experiences in terms of organizational arrangement and enterprise performance in contrast to the model developed by shleifer and vishny shleifer a vishny r w 1994 politicians and firms quarterly journal of economics 109 995 1025 shleifer a vishny r w 1998 the grabbing hand government pathologies and their cures harvard univ press cambridge ma which suggests that government controls over firms come about when politicians can use public funds to buyoff the managers and solicit their cooperation in politically motivated redistribution of rents the present shows that it may be the ability to use the government s regulatory powers at discretion that encourages politicians to impose controls on firms and redistribute their rents the model implies that the politicians appetite for intervention tends to be greater when the cost of collecting and using public funds is higher which is the opposite of what the shleifer vishny model predicts the present model helps explain the puzzling observation that countries with poor institutions are more likely to impose extensive controls on production and maintain large and inefficient public sectors the model also sheds light on a variety of other stylized facts and puzzles and offers new hypotheses to be tested

the incidence and persistence of corruption in economic development abstract economic development and bureaucratic corruption are determined jointly in a dynamic general equilibrium model of growth bribery and tax evasion corruption arises from the incentives of public and private agents to conspire in the concealment of information from the government these incentives depend on aggregate economic activity which in turn depends on the incidence of corruption the model produces multiple development regimes transition between which may or may not occur in accordance with recent empirical evidence the relationship between corruption and development is predicted to be negative

black white wage inequality employment rates and incarceration the observed gap in average wages between black men and white men inadequately reflects the relative economic standing of blacks who suffer from a high rate of joblessness the authors estimate the black white gap in hourly wages from 1980 to 1999 adjusting for the sample selection effect of labor inactivity among working age men in 1999 accounting for labor inactivity including prison and jail incarceration leads to an increase of 7 20 in the black white wage gap adjusting for sample selectivity among men ages 22 30 in 1999 increases the wage gap by as much as 58 increasing selection bias which can be attributed to incarceration and conventional joblessness explains about two thirds of the rise in black relative wages among young men between 1985 and 1998 apparent improvement in the economic position of young black men is thus largely an artifact of rising joblessness fueled by the growth in incarceration during the 1990s

colonisation institutions and development new evidence abstract this article analyses current attempts to identify the factors underlying long term economic growth the author criticises some of the arguments and historical evidence on which the two main explanations that dominate recent literature are based the institutional approach and the approach focusing on the importance of geographical factors using an approach which is deliberately eclectic the author considers the role of geography international trade human capital and institutional quality in explaining development a new estimation is carried out through two stages least squares tsls with instrumental variables the results of the empirical model confirm the central role of institutions in long term economic growth however certain geographical conditions also seem to have influenced countries chances of progress the human capital is a less robust factor in explaining economic growth and trade openness does not seem significant in any estimation nevertheless several questions remain to

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

resource intensity institutions and development summary we examine the relationship between resource abundance and several indicators of human welfare consistent with the existing literature on the relationship between resource abundance and economic growth we find that given an initial income level resource intensive countries tend to suffer lower levels of human development while we find only weak support for a direct link between resources and welfare there is an indirect link that operates through institutional quality there are also significant differences in the effects that resources have on different measures of institutional quality these results imply that the resource curse is a more encompassing phenomenon than previously considered and that key differences exist between the effects of different resource types on various aspects of governance and human welfare 2005 elsevier ltd all rights reserved

bureaucratic structure and bureaucratic performance in less developed countries abstract we argue that several easily identifiable structural features constitute the key ingredients of effective state bureaucracies and should help to predict ratings of bureaucratic performance competitive salaries internal promotion and career stability and meritocratic recruitment we collect a new dataset on these features for bureaucracies of 35 less developed countries controlling for country income level of education and ethnolinguistic diversity we find that our measure of meritocratic recruitment is a statistically significant determinant of ratings supplied by two of three country risk agencies the importance of competitive salaries and internal promotion and career stability could not be clearly established

press freedom externally generated transparency and stock price informativeness international evidence abstract this paper examines the impact of press freedom on stock price informativeness in a sample of firms from 50 countries we find a significant relation between more press freedom and lower stock price synchronicity our results suggest that the freedom of the press can enhance the information environment of stock markets

civil service and the growth of government abstract i study a model of elections which links the scale of government activity to civil service rules without tenure protections bureaucrats career prospects are tied to the electoral prospects of the party that hires them to avoid wasteful partisan spending voters only consent to minimal taxation if bureaucrats are protected by tenure they have no incentive to favour one party over another and governments only produce public goods in turn voters consent to high taxes however because higher tax revenues increase the ability of governing parties to co opt the bureaucracy through favourable compensation large scale government activity is accompanied by inefficiently high public sector wages

excessive public employment and rent seeking traps we propose a model where the size of the public sector and aggregate output are interrelated through the occupational choice of agents who differ in their skill level and degree of public mindedness when the public sector attracts bureaucrats with low degree of public service motivation they will use their position to rent seek by employing an excessive number of unskilled workers this leads to an equilibrium with relatively high unskilled wages which lowers profits and deters entrepreneurship conversely an equilibrium with a lean public sector and greater private economic activity arises when public service motivated agents populate the state bureaucracy these agents exert high effort and employ a limited number of unskilled workers our model also shows that a bloated public sector with high wages may be supported by the unskilled agents

fractionalization entrepreneurship and the institutional environment for entrepreneurship the vast majority of the literature on ethnicity and entrepreneurship focuses on the construct of ethnic entrepreneurship however very little is known about how ethnic heterogeneity affects entrepreneurship and the institutional arrangements affecting entrepreneurship this study attempts to fill the gap and thus examines the effect of ethnic heterogeneity on various outcomes associated with entrepreneurship and the institutional environment for entrepreneurship using indices of ethnic and linguistic fractionalization we show that ethnic heterogeneity negatively influences entrepreneurship we argue that potential channels that can explain the negative effect of fractionalization on entrepreneurship include trust social network and innovation among others this study provides a new perspective on the existing debate that seeks to understand why the levels of entrepreneurial success vary across countries

polarization politics and property rights links between inequality and growth most efforts to trace the effects of income inequality on growth have focused on redistribution however empirical investigation has not substantiated either the positive association of income inequality with redistribution or the negative association of redistribution with economic growth the authors analyze the effects of inequality in the broader context of social polarization they argue that social polarization whether rooted in income inequality or in ethnic tension makes large changes in current policies including those guaranteeing the security of contract and property rights more likely under a wide range of institutional arrangements the resulting uncertainties in the policy and contractual environment hinder growth they find strong empirical support for both parts of this argument the policy implications of their argument are quite distinct from those of arguments that inequality reduces growth by increasing pressures for redistribution if redistributive policies per se were to blame for the low growth resulting from inequality governments that seek to mitigate income inequality must inevitably confront a tradeoff between equity and growth if on the other hand the insecurity of property rights slows growth in unequal or otherwise polarized societies governments that commit over the long run to particular redistributive policies incur less risk of slowing economic growth fiscal redistribution that reduces inequality may actually increase growth by reducing the risks of political uncertainty

why resource poor dictators allow freer media a theory and evidence from panel data every dictator dislikes free media yet many nondemocratic countries have partially free or almost free media in this article we develop a theory of media freedom in dictatorships and provide systematic statistical evidence in support of this theory in our model free media allow a dictator to provide incentives to bureaucrats and therefore to improve the quality of government the importance of this benefit varies with the natural resource endowment in resource rich countries bureaucratic incentives are less important for the dictator hence media freedom is less likely to emerge using panel data we show that controlling for country fixed effects media are less free in oil rich economies with the effect especially pronounced in nondemocratic regimes these results are robust to model specification and the inclusion of various controls including the level of economic development democracy country size size of government and others

cursed by resources or institutions natural resource abundant countries constitute both growth losers and growth winners and the main difference between the success cases and the cases of failure lays in the quality of institutions with grabber friendly institutions more natural resources push aggregate income down while with producer friendly institutions more natural resources increase income such a theory finds strong support in data a key question we also discuss is if resources in addition alter the quality of institutions when that is the case countries with bad institutions suffer a double resource curse as the deterioration of institutions strenghtens the negative effect of more natural resources

divergent paths a new perspective on earnings differences between black and white men since 1940 we present new evidence on the evolution of black white earnings differences among all men including both workers and nonworkers we study two measures i the level earnings gap the racial earnings difference at a given quantile and ii the earnings rank gap the difference between a black man s percentile in the black earnings distribution and the position he would hold in the white earnings distribution after narrowing from 1940 to the mid 1970s the median black white level earnings gap has since grown as large as it was in 1950 at the same time the median black man s relative position in the earnings distribution has remained essentially constant since 1940 so that the improvement then worsening of median relative earnings have come mainly from the stretching and narrowing of the overall earnings distribution black men at higher percentiles have experienced significant advances in relative earnings since 1940 due mainly to strong positional gains among those with college educations large relative schooling gains by blacks at the median and below have been more than counteracted by rising return to skill in the labor market which has increasingly penalized remaining racial differences in schooling at the bottom of the distribution

the voracity effect abstract we analyze an economy that lacks a strong legal political institutional infrastructure and is populated by multiple powerful groups powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock in equilibrium this leads to slow economic growth and a voracity effect by which a shock such as a terms of trade windfall perversely generates a more than proportionate increase in fiscal redistribution and reduces growth we also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks jel f43 o10 o23 o40

public goods institutions human capital and growth evidence from german history what are the origins and consequences of the state as a provider of public goods we study public goods provision established through new laws in german cities during the 1500s cities that adopted the laws subsequently began to differentially produce and attract human capital and to grow faster legal change occurred where ideological competition introduced by the protestant reformation interacted with local politics we study plagues that shifted local politics in a narrow period as sources of exogenous variation in public goods institutions and find support for a causal interpretation of the relationship between legal change human capital and growth

the institutional foundations of public policy documento de trabajo 90 presidential address to the latin american and caribbean economic association lacea paris november 2005 titulo tomado de la pantalla de presentacion visto 12 de septiembre de 2011 noviembre 2005 incluye referencias bibliograficas

the costs of patronage evidence from the british empire i combine newly digitized personnel and public finance data from the british colonial administration for the period 1854 1966 to study how patronage affects the promotion and incentives of governors governors are more likely to be promoted to higher salaried colonies when connected to their superior during the period of patronage once allocated they provide more tax exemptions raise less revenue and invest less the promotion and performance gaps disappear after the abolition of patronage appointments patronage therefore distorts the allocation of public sector positions and reduces the incentives of favored bureaucrats to perform

why is fiscal policy often procyclical many countries especially developing ones follow procyclical fiscal policies namely spending goes up taxes go down in booms and spending goes down taxes go up in recessions we provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for less than benevolent government to appropriate rents voters have incentives similar to the starving the leviathan classic argument and demand more public goods or fewer taxes to prevent governments from appropriating rents when the economy is doing well we test this argument against more traditional explanations based purely on borrowing constraints with a reasonable amount of success

bureaucracy and growth we revisit the hypothesis that a weberian bureaucracy enhances economic growth theoretically we develop arguments for why such a bureaucracy may enhance growth and discuss plausible counterargume

evaluating the econometric evaluations of training programs with experimental data this paper takes the results of an employment and training program thatwas run as a field experiment in which the participants were randomlyassigned into a treatment or a control group and compares these results to the estimates that might have been produced by an econometrician who evaluated the program using the same econometric procedures that have been used in the program evaluation literature this comparison shows that many of these econometric procedures fail toreplicate the experimentally determined results and suggests that researchers should be aware of the potential for specification errorsin other nonexperimental evaluations copyright 1986 by american economic association

impatience reputation and offending reconviction rates for offenders are high despite sentence severity increasing with the number of convictions the standard one shot model of crime provides little scope for exploring persistence effects although recent papers by emons and others have sought to put offending decisions into a more dynamic setting this article develops a simple two period model of offending in which criminal convictions act as an adverse signal in labour markets ordinary and multinomial logistic regression modelling is used to test the predictions of the theoritical model and explore the link between unemployment and convictions the empirical results which are based on longitudinal data from the national child development study ncds in the uk strongly support the view that ceteris paribus individuals with previous convictions are at higher risk of being unemployed

truth telling by third party auditors and the response of polluting firms experimental evidence from india in many regulated markets private third party auditors are chosen and paid by the firms that they audit potentially creating a conflict of interest this article reports on a two year field experiment in the indian state of gujarat that sought to curb such a conflict by altering the market structure for environmental audits of industrial plants to incentivize accurate reporting there are three main results first the status quo system was largely corrupted with auditors systematically reporting plant emissions just below the standard although true emissions were typically higher second the treatment caused auditors to report more truthfully and very significantly lowered the fraction of plants that were falsely reported as compliant with pollution standards third treatment plants in turn reduced their pollution emissions the results suggest reformed incentives for third party auditors can improve their reporting and make regulation more effective jel codes q56 m42 d22 copyright 2013 oxford university press

eight questions about corruption this paper will discuss eight frequently asked questions about public corruption 1 what is corruption 2 which countries are the most corrupt 3 what are the common characteristics of countries with high corruption 4 what is the magnitude of corruption 5 do higher wages for bureaucrats reduce corruption 6 can competition reduce corruption 7 why have there been so few recent successful attempts to fight corruption 8 does corruption adversely affect growth

financial liberalization bureaucratic corruption and economic development abstract we study the effect of international financial integration on economic development when the quality of governance may be compromised by corruption our analysis is based on a dynamic general equilibrium model of a small economy in which growth is driven by capital accumulation and public policy is administered by government appointed bureaucrats corruption may arise due to the opportunity for bureaucrats to embezzle public funds an opportunity that is made more attractive by financial liberalization which at the same time raises efficiency in capital production our main results may be summarized as follows 1 corruption is always bad for economic development but its effect is worse if the economy is open than if it is closed 2 the incidence of corruption may itself be affected by both the development and openness of the economy 3 financial liberalization is good for development when governance is good but may be bad for development when governance is bad and 4 corruption and poverty may coexist as permanent rather than just transitory fixtures of an economy

the impact of an unexpected wage cut on corruption evidence from a xeroxed exam 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 2007 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

disagreement and learning about reforms when it comes to economic reforms in developing countries many economists agree on broad objectives broad objectives however can be pursued in different ways and policy experimentation is often indispensable for learning which alternative works locally we propose a theoretical model to study this societal learning process the model explores the role of disagreeing beliefs about what works it suggests that such disagreement can stall the societal learning process and cause economic stagnation although everyone knows that growth promoting reforms do exist our analysis is motivated by the observation of a negative relationship between disagreement and economic growth among poorer countries

how unregulated is the u s labor market the penal system as a labor market institution1 comparative research contrasts the corporatist welfare states of europe with the unregulated u s labor market to explain low rates of u s unemployment in the 1980s and 1990s in contrast this article argues that the u s state made a large and coercive intervention into the labor market through the expansion of the penal system the impact of incarceration on unemployment has two conflicting dynamics in the short run u s incarceration lowers conventional unemployment measures by removing able bodied working age men from labor force counts in the long run social survey data show that incarceration raises unemployment by reducing the job prospects of ex convicts strong u s employment performance in the 1980s and 1990s has thus depended in part on a high and increasing incarceration rate

the effect of arrests on the employment and earnings of young men many young men commit crime and many are arrested i estimate the effect of arrests on the employment and earnings of arrestees using a large longitudinal data set constructed by merging police records with ui earnings data i find that the effects of arrests are moderate in magnitude and rather short lived

institutions and the resource curse countries rich in natural resources constitute both growth losers and growth winners we claim that the main reason for these diverging experiences is differences in the quality of institutions more natural resources push aggregate income down when institutions are grabber friendly while more resources raise income when institutions are producer friendly we test this theory building on sachs and warner s influential works on the resource curse our main hypothesis that institutions are decisive for the resource curse is confirmed our results contrast the claims of sachs and warner that institutions do not play a role

a controlled field experiment on corruption abstract this paper reports on a controlled field experiment on corruption designed to address two important issues the experimenter s scrutiny and the unobservability of corruption in the experiment a grader is offered a bribe along with a demand for a better grade we find that graders respond more favorably to bigger bribes while the effect of higher wages is ambiguous it lowers the bribe s acceptance but it fosters reciprocation monitoring and punishment can deter corruption but we cannot reject that it may also crowd out intrinsic motivations for honesty when intensified finally our results suggest several micro determinants of corruption including age ability religiosity but not gender

the varieties of resource experience natural resource export structures and the political economy of economic growth many oil mineral and plantation crop based economies experienced a substantial deceleration in growth following the commodity boom and bust of the 1970s and early 1980s this article illustrates how countries dependent on point source natural resources those extracted from a narrow geographic or economic base such as oil and minerals and plantation crops are predisposed to heightened economic and social divisions and weakened institutional capacity this in turn impedes their ability to respond effectively to shocks which previous studies have shown to be essential for sustaining rising levels of prosperity analysis of data on classifications of export structure controlling for a wide array of other potential determinants of governance shows that point source and coffee and cocoa exporting countries do relatively poorly across an array of governance indicators these governance effects are not associated simply with being a natural resource exporter countries with natural resource exports that are diffuse relying primarily on livestock and agricultural produce from small family farms do not show the same strong effects and have had more robust growth recoveries

on the release of information by governments causes and consequences abstract the release of economic and social data by a government provides many benefits to its citizens on a number of different levels information has value in itself for example to facilitate a more efficient allocation of resources but it could also perhaps be seen as a signal of the degree of political and institutional transparency in order to evaluate the potential association between the release of information and the institutional and economic circumstances across countries a new index is developed that has extensive coverage across countries 175 and time 1960 2000 and is based on the quantity of reported socio economic data contained in the world development indicators and the international finance statistics databases using a series of granger causality regressions the release of information by governments is shown to have a significant positive effect on the quality of the bureaucracy in the short run and in the longer term a significant effect on investment and financial sector development in terms of reverse causality the evidence shows that the degree of constraints on the executive branch of government and education both have a positive effect on the quantity of data released by governments

distribution and development in a model of misgovernance abstract this paper presents an analysis of bureaucratic corruption income inequality and economic development the analysis is based on a dynamic general equilibrium model in which bureaucrats are appointed by the government to implement a redistributive programme of taxes and subsidies designed to benefit the poor corruption is reflected in bribery and tax evasion as bureaucrats conspire with the rich in providing false information to the government in accordance with empirical evidence the model predicts a positive relationship between corruption and inequality and a negative relationship between corruption and development

economic inequality new methods for new trends two positions dominate the debate over the recent increases in economic inequality in the united states the job skill mismatch thesis attributes rising inequality to growth in the number of high skill high wage jobs that leaves less skilled workers behind the polarization thesis in contrast argues that the service shift generates growth in the number of both high wage and low wage jobs and declines in the middle standard summary measures of distributional inequality cannot discriminate between these depictions of where job growth is occurring we propose new methods for measurement that provide both summary and detailed information about the distributional shifts in earnings and aframework for statistical inference using data from the curent population survey cps on yearly earnings from 1967 to 1987 we show that the trends in distributional inequality vary considerably by race gender and time while the evidence provides more support for the polarization argument this thesis needs refinement if it is to account for the variations in changing inequality observed here

the white black educational gap stalled progress and the long term consequences of the emergence of crack cocaine markets abstract we propose the rise of crack cocaine markets as a key explanation for the end to the convergence in black white educational outcomes in the united states that began in the mid 1980s after constructing a measure to date the arrival of crack markets in cities and states we show that the decline in educational outcomes for black males begins with the start of the crack epidemic we also show that there are higher murder and incarceration rates after the arrival of crack cocaine and that these are predictive of lower black high school completion rates a result consistent with human capital theory we estimate that effects related to crack markets can account for approximately 40 to 70 of the fall in black male high school completion rates

politics and administration this paper develops a theory of the eectiveness of government programs in the model a bureaucrat chooses a mechanism for assigning a good such as a license or a benet payment to a client of uncertain qualications the mechanism uses a means test to verify the client s eligibility a politician who values the payos of a subset of client types exercises oversight by designating the resources available for means testing and the population of clients that can be served the model makes predictions about common administrative pathologies including inecient and politicized distribution of resources program errors and backlogs when the politician favors marginally qualied clients programs will tend to be universal with low per capita spending and high error rates when the politician favors highly qualied clients programs have smaller client populations higher per capita spending and lower error rates notably the bureaucrat can only use discriminatory testing in the latter case and programs with larger budgets do not spend more per client

the glittering prizes career incentives and bureaucrat performance bureaucracies are configured differently to private sector and political organizations across a wide range of civil services entry is competitive promotion is constrained by seniority jobs are for life and retirement occurs at a fixed age this implies that older entering officers who are less likely to attain the glittering prize of reaching the top of the bureaucracy before they retire may be less motivated to exert effort using a nationwide stakeholder survey and rich administrative data on elite civil servants in india we provide evidence that i officers who cannot reach the senior most positions before they retire are perceived to be less effective and are more likely to be suspended and ii this effect is weakened by a reform that extends the retirement age together these results suggest that the career incentive of reaching the top of a public organization is a powerful determinant of bureaucrat performance

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

organizational isomorphism and corruption an empirical research in russia based on neo institutional literature this article aims to show the influence of organizational isomorphism on corruption the focus is institutional explanations of corruption our model is based on empirical research in russia at the end of the 1990s a face to face questionnaire was conducted with 552 top executives in private firms across various economic sectors we used the structural equation model partial least squares pls technique to test our hypotheses the developed model provides an integrated approach to the study of the relationship between corruption and organizational isomorphism our empirical data from firms in russia allowed us to test various theoretical hypotheses concerning the influence of organizational isomorphism on corruption our emphasis is on the influence of competitive and institutional isomorphism on corruption

merit tenure and bureaucratic behavior evidence from a conjoint experiment in the dominican republic bureaucratic behavior in developing countries remains poorly understood why do some public servants yet not others work hard to deliver public services misuse state resources and or participate in electoral mobilization a classic answer comes from weber bureaucratic structures shift behavior toward integrity neutrality and commitment to public service our study conducts the first survey experimental test of the effects of bureaucratic structures it does so through a conjoint experiment with public servants in the dominican republic looking at merit examinations and job stability we find that weber was right but only partially recruitment by examination curbs corruption and political services by bureaucrats while enhancing work motivation job stability by contrast only decreases political services tenured bureaucrats are less likely to participate in electoral mobilization examinations thus enhance the quality of bureaucracy motivation and lower corruption and democracy electoral compe

traveling agents political change and bureaucratic turnover in india abstract we develop a framework to empirically examine how politicians with electoral pressures control bureaucrats with career concerns and the consequent implications for bureaucrats career investments unique microlevel data on indian bureaucrats support our key predictions politicians use frequent reassignments transfers across posts of varying importance to control bureaucrats high skilled bureaucrats face less frequent political transfers and lower variability in the importance of their posts we find evidence of two alternative paths to career success officers of higher initial ability are more likely to invest in skill but caste affinity to the politician s party base also helps secure important positions

political foundations of the resource curse in this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse we show 1 politicians tend to over extract natural resources relative to the efficient extraction path because they discount the future too much and 2 resource booms improve the efficiency of the extraction path however 3 resource booms by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections increase resource misallocation in the rest of the economy 4 the overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create countries without such institutions however may suffer from a resource curse

political budget cycles and the civil service evidence from highway spending in us states abstract we study political budget cycles in infrastructure spending that are conditional on bureaucratic organization bureaucrats can facilitate or hinder politicians ability to engage in voter friendly spending around elections to test this idea we use civil service reforms undertaken by us states in the second half of the 20th century to study political budget cycles in highway spending under civil service and patronage we find that under patronage highway spending is 12 higher in election years and 9 higher in the year before an election by contrast under civil service highway spending is essentially smooth over the electoral cycle these findings provide a novel way through which civil service rules can stabilize government activity

a free press is bad news for corruption abstract this paper tests the proposition that a free press may be a powerful control on corruption we find evidence of a significant relationship between more press freedom and less corruption in a large cross section of countries this result is robust to specification and sample and the relationship is not sensitive to the choice of a particular measure of corruption or of press freedom furthermore we present evidence which suggests that the direction of causation runs from higher press freedom to lower corruption

revisiting the oil curse does ownership matter summary a large body of literature finds a negative relationship between oil abundance and economic growth the existing empirical evidence on the oil curse however does not account for variations in the ownership of oil this article investigates whether the effect of oil abundance on growth varies with ownership structures it also investigates whether pre existing institutional conditions influence the effect of oil abundance across different ownership structures using a novel database on ownership structures and employing a panel fixed effects estimation method it analyzes a sample of oil exporting developing countries during the period 1984 2005 the results show that the effect of oil abundance on growth varies with ownership structures and is also influenced by the quality of pre existing institutions under state ownership and control oil abundance reduces growth when the institutional quality is poor but increases growth when the institutional quality is good under private ownership on the other hand oil abundance increases growth when the institutional quality is poor but reduces growth when the institutional quality is good the results suggest that ownership matters and countries can avoid the oil curse by choosing an appropriate ownership structure given their pre existing institutional circumstances the policy advice in this article is adopt state ownership and control if the institutions are strong if the institutions are weak transfer ownership to foreign oil companies

vouchers for private schooling in colombia evidence from a randomized natural experiment colombia used lotteries to distribute vouchers which partially covered the cost of private secondary school for students who maintained satisfactory academic progress three years after the lotteries winners were about 10 percentage points more likely to have finished 8th grade primarily because they were less likely to repeat grades and scored 0 2 standard deviations higher on achievement tests there is some evidence that winners worked less than losers and were less likely to marry or cohabit as teenagers benefits to participants likely exceeded the 24 per winner additional cost to the government of supplying vouchers instead of public school places

emergence and persistence of inefficient states we present a theory of the emergence and persistence of inefficient states based on patronage politics the society consists of rich and poor the rich are initially in power but expect to transition to democracy which will choose redistributive policies taxation requires the employment of bureaucrats by choosing an inefficient state structure the rich may be able to use patronage and capture democratic politics so reducing the amount of redistribution in democracy moreover the inefficient state creates its own constituency and tends to persist over time intuitively an inefficient state structure creates more rents for bureaucrats than would an efficient one when the poor come to power in democracy they will reform the structure of the state to make it more efficient so that higher taxes can be collected at lower cost and with lower rents for bureaucrats anticipating this when the society starts out with an inefficient organization of the state bureaucrats support the rich who set lower taxes but also provide rents to bureaucrats we obtain that the rich bureaucrats coalition may also expand the size of bureaucracy excessively so as to generate enough political support the model shows that an equilibrium with an inefficient state is more likely to arise when there is greater income inequality when bureaucratic rents take intermediate values and when individuals are sufficiently forward looking jel p16 h11 h26 h41

the resource curse and its potential reversal several recent papers suggest that the negative association between natural resource intensity and economic growth can be reversed if institutional quality is high enough we try to understand this result in more detail by decomposing the resource measure using alternative measures of both resources and institutions and by studying different time periods while an institutional reversal is present in many specifications only ores and metals interacted with the icrg measure of institutional quality consistently have a negative growth effect but a positive interaction that turns the curse around when institutions are good enough

political determinants of state capacity in latin america summary in this article we argue that both democracy and governments partisanship have a bearing on state capacity in latin america we also maintain that state capacity is a condition rooted in history and society it can be built or purposefully undermined in particular in latin america parties of the left have frequently operated to reallocate social and political clout in favor of underprivileged groups the inclusion of the latter in the political process helped states to thwart pressures from dominant elites opposing redistribution and tax increases these mobilized groups have also pushed for universal public services as high quality education health care or public housing which required well functioning administrations and an adequate institutional capacity thus contributing to consolidate stateness in the area whereas previous qualitative studies analyzed the mechanisms that relate democracy and political partisanship to state capacity we test this hypothesis quantitatively to this end we estimate the effect over time of democracy political parties and other socio demographic factors on a composite measure of stateness obtaining supportive evidence in particular we find that higher democracy levels and left leaning governments favored the growth of state strength in the area during 1975 2009 and discuss these findings with reference to the political experience of latin america

governance and the effectiveness of public health subsidies evidence from ghana kenya and uganda abstract distributing subsidized health products through existing health infrastructure could substantially and cost effectively improve health in sub saharan africa there is however widespread concern that poor governance in particular limited health worker accountability seriously undermines the effectiveness of subsidy programs we audit targeted bed net distribution programs to quantify the extent of agency problems we find that around 80 of the eligible receive the subsidy as intended and up to 15 of subsidies are leaked to ineligible people supplementing the program with simple financial or monitoring incentives for health workers does not improve performance further and is thus not cost effective in this context

state capacity and health outcomes comparing argentina s and chile s reduction of infant and maternal mortality 1960 2013 summary there is substantial quantitative evidence linking higher state capacity to better health outcomes but scant attention has been paid to the specific mechanisms through which this causal influence operates the problem is compounded by the considerable diversity of ways in which the influence of the state on development outcomes has been conceptualized making it hard for practitioners to extract policy lessons from this literature in this study i seek to help to address both of these problems through a historical comparative examination of the ways in which state capacity affected infant and maternal mortality reduction in argentina and chile over the last half century i show that chile s greater investment in health specific state capacities was behind the remarkable historical reversal of fortune between these two countries in terms of infant and maternal mortality levels from 1960 to the present as well as behind chile s notorious reduction in the territorial inequality of these outcomes i show the key difference between the two countries was the quality reach and homogeneity of their respective public health systems from a theoretical standpoint i argue that the notions of bureaucratic quality and infrastructural power are both necessary and complementary perspectives through which to conceptualize state capacity and understand its causal influence over health and other desirable developmental outcomes in turn this suggests that a useful way to specify calls for better governance and to achieve better long run health performance may be to invest in the public health system s technical bureaucratic autonomy and in its system wide planning and coordination capacities