media scrutiny and the quality of public officials i investigate whether attempts by the media to determine a candidate s fitness for office lowers the average quality of public officials what i call the media scrutiny paradox media scrutiny imperfectly signals heterogeneous candidates type but imposes privacy costs and reputational costs on politicians the quality of office holders falls if the selection effect is adverse and outweighs the screening effect a low quality information signal which could result if the media focus on irrelevant aspects of behavior makes the screening effect small and the media paradox more likely to hold individuals of good character might invest more in their reputation and have more at stake from being falsely identified as a rapscallion the actual malice standard established in new york times v sullivan likely increased relatively the cost of candidacy for good people and lowered the quality of officials

testing for preference change in consumer demand an indirectly separable semiparametric model this article considers the hypothesis that preference changes may partly explain observed consumption patterns a model is developed based on indirect weak separability the kernel estimator of the regression function models the unknown shape of demand functions and a parametric structure models seasonality dynamics and preference change this semiparametric specification is applied to u s meat demand the results support the notion that changes in consumer preferences due to consumers awareness of the health hazards of cholesterol and saturated fat intake may explain an increased consumption of white meat and a decreased consumption of red meat

sensationalism newspaper profits and the marginal value of watergate newspaper publishers supposedly profit some sensational events focusing on the two different products sold by publishers newspapers and advertising space this paper shows why sensational events do not necessarily increase publishers wealth it also uses financial market analysis to examine the wealth effects of one sensational event watergate on a portfolio of newspaper stocks and on the washington post in particular no significant effects are found

the millennium challenge corporation organizational constraints on us foreign aid 2004 11 summary the millennium challenge corporation mcc was established in 2004 to channel billions of us foreign assistance dollars to various infrastructure projects within a select group of low income countries that could presumably help themselves when ruling justly investing in people and encouraging economic freedom were considered primary contributors to self sustaining economic growth through multi method analysis this study reveals that with its choice of assessment categories and accompanying indicators the mcc undermines its governing principles in aid candidate qualification

regulatory discretion and the unofficial economy johnson kaufmann and shleifer 1997 find that the share of the unofficial economy in gdp is determined by the extent of control rights held by politicians and bureaucrats in post communist economies exploring in more detail the role of bribes and using a broader data set from the oecd latin america and transition economies we find that the unofficial economy accounts for a larger share of gdp when there is more corruption and when the rule of law is weaker while these findings are consistent with the earlier results for transition economies in the larger country sample we find it is not necessarily the case that more regulation or higher taxes directly increases the size of the unofficial economy the problem appears to be not regulation or taxation per se but whether the state administrative system can operate without corruption a high level of regulatory discretion helps create the potential for corruption and drive firms into the unofficial economy

residential energy demand and the interaction of price and temperature british experimental evidence the responsiveness of heating energy demand to pricing is shown to be dependent on temperature and vice versa this is investigated empirically using residential electricity demand data obtained under conditions of price variation from a british time of use pricing experiment results confirm that consumer responses to higher electricity prices are conditional on temperature levels particularly during the daytime and for households with high overall levels of electricity consumption and previous experience of time of use tariffs

common agency and coordination general theory and application to government policy making we develop a model of common agency with complete information and general preferences with nontransferable utility and we prove that the principals nash equilibrium in truthful strategies implements an efficient action we apply this theory to the construction of a positive model of public finance where organized special interests can lobby the government for consumer and producer taxes or subsidies and targeted lump sum taxes or transfers the lobbies use only the nondistorting transfers in their noncooperative equilibrium but their intergroup competition for transfers turns into a prisoners dilemma in which the government captures all the gain that is potentially available to the parties

inequality and the environmental kuznets curve abstract is income inequality harmful to the environment the answer to this question has not reached a consensus in the literature this study seeks to provide insight into this question by examining the influence of income inequality on the environmental kuznets curve ekc i e the impact of income inequality on the ekc turning point two potential mechanisms through which inequality may affect the ekc turning point by reducing public demand for environmental protection and by increasing a power of capital owners to prevent such protection using a large sample n 170 174 of countries we find evidence of the ekc for so2 emissions and income inequality has a significant impact on the ekc turning point income inequality increases the ekc turning point suggesting that high inequality can be damaging to the environment the results are robust to potential outliers different data sources of income inequality a different so2 emissions measure changes in model specification different samples and an alternative estimation method we also find that inequality appears to be more important than corruption in determining the ekc turning point

dodging the grabbing hand the determinants of unofficial activity in 69 countries across 69 countries higher tax rates are associated with less unofficial activity as a percent of gdp but corruption is associated with more unofficial activity entrepreneurs go underground not to avoid official taxes but to reduce the burden of bureaucracy and corruption dodging the grabbing hand in this way reduces tax revenues as a percent of both official and total gdp as a result corrupt governments become small governments and only relatively uncorrupt governments can sustain high tax rates 2000 elsevier science s a all rights reserved

media exposure and internal migration evidence from indonesia abstract this paper investigates the impact of television on internal migration in indonesia we exploit the differential introduction of private television throughout the country and the variation in signal reception due to topography to estimate the causal effect of media exposure our estimates reveal important long and short run effects an increase of one standard deviation in the number of private tv channels received in the area of residence as an adolescent reduces future inter provincial migration by 1 7 2 7 percentage points and all migration inter and intra provincial by 3 9 6 8 percentage points short run effects are similar in magnitude we also show that respondents less exposed to private television are more likely to consider themselves among the poorest groups in society as we discuss in a stylized model of migration choice under imperfect information these findings are consistent with indonesian citizens over estimating the net gains from internal migration when access to television is limited

leviathan at bay constitutional versus political controls on government a dependence on the people is no doubt the primary control on government but experience has taught mankind the necessity of auxiliary precautions james madison federalist no 51 i introduction citizens possess two main methods of controlling politicians elections and constitutional constraints the british system of parliamentary supremacy and america s written constitution with judicial review by the supreme court reflect the contrasting approaches political theorists continue to debate the relative effectiveness of constitutional and electoral controls on politicians these controls seemingly are substitutes if elections effectively control politicians constitutional constraints become redundant and can only lower the effectiveness of government public choice theory separately examines elections and constitutions an extensive literature beginning with barro 1973 analyzes electoral controls but has not considered constitutional controls constitutional political economy examines various constraints on politicians buchanan 1987 brennan and buchanan 1980 yet assumes elections insufficiently control politicians recent studies of term limits i e dick and lott 1993 represent one effort to analyze constitutional and electoral controls together i integrate constitutional limits on government into a model of electoral control of politicians my model features two types of politicians knaves who abuse discretionary powers at their disposal and angels who never misuse power citizens delegate a variable amount of discretionary power to government which provides benefits if properly employed but lowers welfare if abused the interaction between constitutional limits and elections is complicated constraints complement electoral controls based on politician payoffs selection and incentive effects while the screening and sorting effects substitute for constraints i proceed in this paper as follows section ii describes the citizen s constitutional delegation of authority to government and incorporates electoral screening of candidates optimal delegation of power increases with the effectiveness of screening but unless screening is perfect constitutional limits help keep leviathan at bay section iii endogenizes the candidate pool and examines the selection effect constitutional controls the composition of the candidate pool depends on delegation to government which has implications for the propensity of politicians to pursue their personal self interest while constitutional political economy relies heavily on the threat from knavish politicians many political observers contend that most politicians sincerely pursue the public interest as they perceive it i show that politicians observed honesty does not invalidate the argument for chains section iv considers the ability of repeated elections to sort knaves out of office the sorting effect increases optimal delegation of power to government but constraints can still play a useful role if knaves try for office and electoral review is not continuous section v allows knaves to act opportunistically and considers the incentive effect of retrospective voting and post political incentives constitutional constraints complement electoral incentives by limiting opportunistic knaves gain from shirking the final section concludes ii constitutional choice in a model of angels and knaves i adopt a principal agent view of government a representative citizen selects an agent to exercise the powers of government on her behalf the representative citizen framework abstracts from differences amongst the population about the actions the agent should undertake the control of politicians becomes difficult in the absence of a common interest both positively and normatively consequently models of electoral control typically employ this assumption 1 the agency model assumes a conflict of interest between the principal and agent

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

electricity demand by time of use an application of the household aids model in this study we estimated the price and expenditure elasticities of peak and off peak electricity consumption using a micro data set on 220 households living in 19 swiss cities the household version of the almost ideal demand system model aids was used as a framework to incorporate household characteristics the aids model was expanded by specifying the intercept as a linear function of household characteristics variables results indicate that demand for peak and off peak electricity is elastic and that cross price effects are positive as well as the elasticity of substitution therefore peak and off peak electricity are substitutes in the hicks allen sense

a comparative study of inequality and corruption this article argues that income inequality increases the level of corruption through material and normative mechanisms the wealthy have both greater motivation and more opportunity to engage in corruption whereas the poor are more vulnerable to extortion and less able to monitor and hold the rich and powerful accountable as inequality increases inequality also adversely affects social norms about corruption and people s beliefs about the legitimacy of rules and institutions thereby making it easier for them to tolerate corruption as acceptable behavior this comparative analysis of 129 countries using two stage least squares methods with a variety of instrumental variables supports the authors hypotheses using different measures of corruption the world bank s control of corruption index and the transparency international s corruption perceptions index the explanatory power of inequality is at least as important as conventionally accepted causes of corruption such as economic development the autho

promotion turnover and preemptive wage offers this paper examines the strategic promotion and wage decisions of employers when employees may be more valuable to competing firms competing employers must incur a cost to learn the quality of their match with a manager promotion signals that workers are potentially valuable managers in other firms and so can lead to turnover to preempt competition for a manager an employer may offer a wage high enough to discourage competitors from acquiring information and bidding up the wage further or hiring the worker away this transfers wages from good workers to bad more costly information acquisition yields greater expected lifetime wages copyright 1993 by american economic association

independent auditors bias and political agency abstract this paper analyzes political agency with endogenous information collection and revelation by third party auditors while increasing incentives for auditors to provide information straightforwardly improves political control a small amount of pro incumbent bias can also be useful for maintaining high levels of control when the equilibrium level of control is high most investigations uncover positive information about the incumbent since positive information increases reelection rates mildly pro incumbent auditors are willing to work harder than unbiased auditors in these equilibria for moderate levels of control pro incumbent auditors are again useful due to their extra effort even though they may suppress some negative information in equilibrium only when market incentives are low so equilibrium control is weak are unbiased or anti incumbent biased auditors better for voters than mildly pro incumbent auditors

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

the productivity of trust this paper tests whether social trust affects total factor productivity tfp using both development and growth accounting we find strong evidence of a causal positive effect of social trust on the level and growth of tfp we moreover observe that the effect of social trust on tfp runs through economic judicial institutions but not through political institutions those findings resist a series of robustness checks

up or out contracts a signaling perspective a firm will typically gather information concerning its own workers that is not available to other potential employers while other firms will attempt to reduce this information asymmetry by observing the actions of the initial employer i argue that this process can be important in environments characterized by up or out contracts in that the retention decision can serve as a signal of productivity the article investigates this argument in an environment where up or out contracts are employed because they provide workers with an incentive to accumulate general human capital and where learning takes place in a diffuse fashion

non price equilibria for non marketed goods abstract as part of the resources for the future frontiers of environmental economics collection of papers we consider the problem of general equilibrium feedback effects in non price space as they relate to non market valuation our overall objective is to examine the extent to which non price equilibria arising from both simple and complex sorting behavior can be empirically modeled and the resulting differences in partial and general equilibrium welfare measures quantified after motivating the problem in general we consider the specific context of congestion in recreation demand applications which we classify as the outcome of a simple sorting equilibrium using both econometric and computable general equilibrium cge models we examine the conceptual and computational challenges associated with this class of problems and present findings on promising solution avenues we demonstrate the relevance of accounting for congestion effects in recreation demand with an application to lake visits in iowa our econometric and cge results confirm that for some plausible counterfactual scenarios substantial differences exist between partial and general equilibrium welfare estimates we conclude the paper by describing tasks that are needed to move forward research in this area

political economy of pension plans impact of institutions gender and culture abstract national pension systems are an important part of financial intermediation and worker welfare in most countries but how and why do they differ internationally controlling for important political economic and social institutions we document that international differences in pension progressivity or how pensions reflect lifetime earnings are negatively related to masculinity uncertainty avoidance individualism long term orientation employment rights average pension levels social trust and economic inequality we also find that pension progressivity is positively related to the economic and societal role of women the extent of catholicism as well as political voice and accountability these results provide important insights for both public policy and mnc managers

income inequality corruption and subjective well being based on the data of cgss2013 we analyse the relationship between income inequality corruption and subjective well being using an ordered probit model our results indicate that income inequality

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

a public and private choice model of broadcasting this paper has established a framework for the analysis of program diversity and audience shares under different regimes of ownership regulation and channel quality the model is one of comparative statics and lends itself to analytical solutions it can serve as a tool to clarify programming decision making and the impact of various institutional arrangements the audience maximization of commercial broadcasting leads to program quality similar to that of a direct democratic process to create a bias towards quality alternative mechanisms had to be introduced that together with the potential for the propaganda use of broadcasting and the potentially large rents of controlling a scarce channel made questions of broadcast policy extraordinarily hard fought especially in european countries however the emergence of alternative distribution channels and payment mechanisms has moved television programs much more into the mainstream of economic transactions in consequence the need to use the political arena to assure the supply of certain programs has declined the marginal losses to incumbent channels has successively decreased and the propaganda reach has been reduced by the spread of programs over the distribution therefore liberalization is less resisted because the stakes have become lower

wealth culture and corruption this paper examines the impact of national wealth income distribution government size and four cultural variables on the perceived level of corruption in a country the study finds that corruption is significantly correlated to gnp per capita power distance masculinity and uncertainty avoidance significant interaction effects occur in collectivistic and high power distance countries suggestions for future research are developed

price stability and central bank independence discipline credibility and democratic institutions despite mixed empirical evidence in the past two decades central bank independence cbi has been on the rise under the assumption that it ensures price stability using an encompassing theoretical approach and new yearly data for de jure cbi seventy eight countries 1973 2008 we reexamine this relationship distinguishing the role of printing less money discipline from the public s beliefs about the central bank s likely actions credibility democracies differ from dictatorships in the likelihood of political interference and changes to the law because of the presence of political opposition and the freedom to expose government actions cbi in democracies should be directly reflected in lower money supply growth besides being more disciplinarian it also ensures a more robust money demand by reducing inflation expectations and therefore inflation empirical results are robust and support a discipline effect conditioned by political institutions as well as a credibility effect

modelling time of day substitution using the second moments of demand time of day tod rates are a commonly used method for peak load pricing of many services such services as electricity communications transportation shared computer facilities and computer networks i e the internet either use or will use some form of tod pricing however tod rates do not ensure a movement towards economic efficiency unless the patterns of tod substitution are known the model presented here provedes a method for estimating tod substitution without the need for rate experiments that have proven to be both costly and limited by sample selection bias problems this model employs the estimated second moment of demand to estimate a matrix of relative own and cross price elasticities and it can estimate elasticities even when there is no apparent tod price variation the low level of computations required for the estimates allows the application of a bootstrap procedure to estimate the covariance matrix of the elasticities two applications of this model are presented a case of a

the neoclassical model of consumer demand with identically priced commodities an application to time of use electricity pricing hick s theorem permits aggregation of commodities when their relative prices are fixed but contrary to a widely expressed view it does not require that they be aggregated even where commodities have identical prices all of their income elasticities and many of their price elasticities can be identified through econometric estimation our empirical illustration uses the generalized leontief indirect utility function with data from the wisconsin residential electricity pricing experiment we model the demand for six commodities although there are only two unique prices

radio s impact on public spending if informed voters receive favorable policies then the invention of a new mass medium may affect government policies since it affects who is informed and who is not these ideas are developed in a voting model the model forms the basis for an empirical investigation of a major new deal relief program implemented in the middle of the expansion period of radio the main empirical finding is that u s counties with many radio listeners received more relief funds more funds were allocated to poor counties with high unemployment but controlling for these and other variables the effects of radio are large and highly significant

voter heterogeneity and political corruption abstract we show that policies that eliminate corruption can depart from socially desirable policies and this inefficiency can be large enough to allow corruption to live on political competition between an honest welfare maximiser and corrupt politicians is studied in our model the corrupt politician is at a distinct disadvantage there is no asymmetric information no voter bias and voters are fully rational yet corruption cannot be eliminated when voters have heterogeneous preferences

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

raiding opportunities and unemployment this article studies the impact of raiding opportunities in a labor market in which worker abilities differ recruiting firms can either raid an elsewhere employed worker of known ability by bidding up his wage or go through costly search to find a good worker among the unemployed in equilibrium all types of workers experience unemployment high ability workers involuntarily the raiding opportunities give rise to involuntary unemployment without changing the basic properties of the competitive model and thus suggest new implications of various institutional parameters on unemployment in particular unemployment compensation minimum wages wage taxation and search requirements

does the quality of institutions enhance savings the case of sub saharan africa over the last three decades there has been increasing disparity in savings across regions and income groupings globally in this paper we investigate whether the quality of institutions explains

involuntary layoffs in a model with asymmetric information concerning worker ability this paper examines the contract between a risk neutral firm and its risk averse employees assuming that worker ability is privately learned by the firm after a period of employment employers in an external spot labour market attempt to infer worker quality from the observable actions taken by the firm such as the number of workers it lays off the threat of spot market raids distorts the optimal contract layoffs may be involuntary and can exceed efficient levels a seniority layoff rule may be included in the contract to avoid the adverse selection problems that arise if layoffs are conducted on the basis of ability

is corruption really bad for inequality evidence from latin america this article presents new evidence on the relationship between corruption and income inequality using a panel data methodology we find that lower corruption is associated with higher income inequality in latin america this result is in contrast to other empirical studies but it makes sense in latin america for a number of reasons the finding of an inverse relationship between inequality and corruption suggests that institutional reform policies by themselves may be misguided

the relationship between corruption and income inequality in u s states evidence from a panel cointegration and error correction model we investigate the causality between corruption and income inequality within a multivariate framework using a panel data set of all 50 u s states over the period 1980 to 2004 the heterogeneous panel cointegration test by pedroni oxf bull econ stat 61 653 670 1999 econom theory 20 597 627 2004 indicates that in the long run corruption and the unemployment rate have a positive and statistically significant impact on income inequality while a negative impact is found for real personal income per capita education and unionization rate the granger causality results associated with a panel vector error correction model indicate both short run and long run bidirectional causality between corruption and income inequality

incumbent performance and electoral control in the pure theory of electoral competition citizens compare the platforms of the candidates and vote for the one whose platform is preferred candidate strategies are identified with promises about future performance in office models of this sort have been developed in both static mckelvey 1975 and dynamic kramer 1977 i settings and all appear to have the property that if the set of alternatives is large enough in some sense equilibrium platforms rarely exist but these models have another feature that is quite as disturbing as their instability in the static setting discussed by mckelvey little attention is paid to the possibility that once in office the politician s preferences may diverge from those of his constituents and that he may therefore choose policies at variance from his platform instead it is simply assumed that promises will be kept whether or not such behavior is congruent with the interest of the officeholder it is sometimes argued that an enforcement mechanism may exist to discipline politicians for failing to keep promises but without a specification of the mechanism it is not obvious that it would be in the interests of the

the political economy of government responsiveness theory and evidence from india the determinants of government responsiveness to its citizens is a key issue in political economy here we develop a model based on the solution of political agency problems having a more informed an politically active electorate strengthens incentives for governments to be responsive this suggests that there is a role both for democratic institutions and the mass media in ensuring that the preferences of citizens are reflected in policy the ideas behind the model are tested on panel data from india we show that public food distribution and calamity relief expenditure are greater controlling for shocks where governments face greater electoral accountability and where newspaper circulation is highest

openness and the politics of potable water improving access to potable water has become an increasingly urgent concern for developing nations in the current era of globalization according to standard wisdom if developing countries undertake certain domestic reforms such as investing in infrastructure and engineering then safe and clean drinking water will improve this analysis uncovers however that in addition to such domestic efforts one of the greatest factors affecting water uncertainty is in fact internationally induced trade surprisingly both scholars and practitioners have neglected the potential impacts of expanding trade on access to potable water this analysis is the first large n cross national study of water that focuses on the interplay of trade and politics both international and domestic as the primary driving forces behind improvements in or constraints to water access the author hypothesizes that growing export pressures are constraining drinkable water in poor countries but a particular domestic condition can mit

the impact of income inequality on rental affordability an empirical study in large american metropolitan areas american metropolitan areas have experienced rising income inequality and worsening rental affordability in the past few decades has the rise of inequality caused worsening rental affordability t

the politics of ambiguity politicians face a trade off between the policies that maximize their chances of reelection and their most preferred policies or the policies most preferred by the constituency which they represent this paper analyzes this trade off in a dynamic electoral model in which the voters are not fully informed about the preferences of the incumbent first we show that the incumbent follows a policy which is intermediate between the other party s ideal policy and his own ideal policy second we show that often the incumbent has an incentive to choose procedures which make it difficult for voters to pinpoint his preferences with absolute precision thus politicians may prefer to be ambiguous

explaining global patterns of international aid for linked biodiversity conservation and development summary there is little systematic knowledge about the nature extent and trends of international aid for projects that link biodiversity conservation and development goals this study uses a new dataset to analyze spatial and temporal patterns of such aid globally over the past three decades results reveal significant donor selectivity in aid allocation though linked conservation and development aid comprised more than two thirds of all biodiversity related assistance biodiversity aid generally was directed to biodiversity rich well governed countries but countries able to exert greater political leverage secured more linked aid than aid targeted to conservation without a stated development objective

government control of the media abstract we present a formal model of government control of the media to illuminate variation in media freedom across countries and over time media bias is greater and state ownership of the media more likely when the government has a particular interest in mobilizing citizens to take actions that further some political objective but are not necessarily in citizens individual best interest however the distinction between state and private media is smaller large advertising markets reduce media bias in both state and private media but increase the incentive for the government to nationalize private media media bias in state and private media markets diverge as governments become more democratic whereas media bias in democracies and autocracies converge as positive externalities from mobilization increase

church state separation and redistribution we analyze how religion affects voting and redistribution our model directs attention away from the particular faith belief or risk attitudes of religious individuals and emphasizes instead how organized religion opens the door to standard group based distributive politics we argue that organized religion makes it possible for the rich and the religious poor to form electoral coalitions in favor of low taxes and limited redistribution such electoral coalitions form out of simple material self interest and they occur at the expense of the secular poor however the material reward to the religious poor from supporting such electoral coalitions depends on the institutional context as state support for religion increases poor religious voters have greater incentives to vote with poor secular voters in favor of parties that support high taxes the analysis therefore highlights the possibilities of understanding how religion affects politics without asserting that religious individuals differ systematically from secular ones in their values or preferences

construction corrupts empirical evidence from a panel of 42 countries the construction sector whether privately or publicly financed is characterized by potentially large rents and government intervention making it vulnerable to corruption consistent with this both case study and survey evidence has been provided highlighting the problem of malfeasance in this sector in this article we test the proposition that a bigger construction sector is likely to be inimical to clean government based on a panel of 42 countries over the period 1995 2011 we control for a range of potentially confounding variables and the expectation that corrupt public officials may favor the development of this sector because it increases the volume of rents available to them our empirical evidence shows that a larger construction sector will tend to increase perceptions of the extent to which public power is exercised for private gain

television and voter turnout i use variation across markets in the timing of television s introduction to identify its impact on voter turnout the estimated effect is significantly negative accounting for between a quarter and a half of the total decline in turnout since the 1950s i argue that substitution away from other media with more political coverage provides a plausible mechanism linking television to voting as evidence for this i show that the entry of television in a market coincided with sharp drops in consumption of newspapers and radio and in political knowledge as measured by election surveys i also show that both the information and turnout effects were largest in off year congressional elections which receive extensive coverage in newspapers but little or no coverage on television

government effectiveness and regional variation in informal employment abstract this article analyses the role of government effectiveness in the determination of informal employment a theoretical model is developed in which local governance and worker skill level are assumed to influence the decision of the worker whether to seek employment in the formal or informal sectors the model is assessed empirically using data from brazil where almost half of the urban labour force is employed informally the empirical analysis supports the predictions of the model and suggests that the probability of a worker being employed informally is lower in regions with better governance and higher average education

decentralization and corruption evidence across countries the relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design the theoretical literature makes ambiguous predictions about this relationship and it has remained virtually unexamined by empiricists the authors make a first attempt at examining the issue empirically by looking at the cross country relationship between fiscal decentralization and corruption as measured by a number of different indices their estimates suggest that fiscal decentralization in government spending is significantly associated with lower corruption moreover they find that the origin of a country s legal system for example civil versus common legal code performs extremely well as an instrument for decentralization the estimated relationship between decentralization when so instrumented and corruption is even stronger the evidence suggests a number of interesting areas for future work including investigating whether there are specific services for which decentralized provision has a particularly strong impact on political rent extraction and understanding the channels through which decentralization succeeds in keeping corruption in check

excessive labour raiding final version received 24 july 2006 labour raiding refers to rms recruiting and hiring employed workers the literature on labour raidingsupports the idea that raiding sorts workers into their most productive positions i present a model wherean outside rm decides whether or not to pay to learn the match quality of an employed worker and theemployer decides whether or not to pay its worker a high wage that pre empts the raiding i show that theemployer may pay a low wage and gamble that it will not be raided rather than use a pre emptive wage this leads to an excessive amount of raiding

media freedom and gender equality a cross national instrumental variable quantile analysis we investigate the impact of media freedom on gender equality in education for a sample of 63 countries taken over the period 1995 2004 our analysis is motivated by the idea that the impact of media freedom on gender equality may differ over the conditional distribution of the response variable using instrumental variable quantile regression to control for endogeneity in per capita income we find that greater freedom of the media improves gender equality only in the 0 25 and 0 50 quantiles of the conditional distribution countries with the greatest disparities in gender outcomes experience no significant impact of media freedom

the market for news we investigate the market for news under two assumptions that readers hold beliefs which they like to see confirmed and that newspapers can slant stories toward these beliefs we show that on the topics where readers share common beliefs one should not expect accuracy even from competitive media competition results in lower prices but common slanting toward reader biases on topics where reader beliefs diverge such as politically divisive issues however newspapers segment the market and slant toward extreme positions yet in the aggregate a reader with access to all news sources could get an unbiased perspective generally speaking reader heterogeneity is more important for accuracy in media than competition per se

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

the injustice of inequality in many countries the operation of legal political and regulatory institutions is subverted by the wealthy and the politically powerful for their own benefit this subversion takes the form of corruption intimidation and other forms of influence we present a model of such institutional subversion focusing specifically on courts and of the effects of inequality in economic and political resources on the magnitude of subversion we then use the model to analyze the consequences of institutional subversion for the law and order environment in the country as well as for capital accumulation and growth we illustrate the model with historical evidence from gilded age united states and the transition economies of the 1990s we also present some cross country evidence consistent with the basic prediction of the model

media freedom political knowledge and participation this paper examines the relationship between media freedom from government control and citizens political knowledge political participation and voter turnout to explore these connections i first examine media freedom and citizens political knowledge in thirteen central and eastern european countries with data from freedom house s freedom of the press report and the european commission s candidate countries eurobarometer survey next i consider media freedom and citizens political participation in 60 countries using data from the world values survey finally i investigate media freedom and voter turnout in these same 60 or so countries with data from the international institute for democracy and electoral assistance i find that where government owns a larger share of media outlets and infrastructure regulates the media industry more and does more to control the content of news citizens are more politically ignorant and apathetic where the media is less regulated and there is greater private ownership in the media industry citizens are more politically knowledgeable and active these results are robust to sample specification and alternative measures of media freedom

the long run effects of a time of use demand charge modifications in demand due to time of use tou pricing have potential to improve the efficiency of electric power supply with long lead times for plant construction utility planners need long run estimates of response to tou rates existing evidence is primarily drawn from short run tou experiments we provide estimates of long run response to a nonexperimental residential tou rate offered by duke power the rate contains a demand charge applied to the maximum rate of energy consumption during the peak period we find that customer response increases over time in a manner that enhances the ability of tou rates to reduce system peak

hold your nose and vote corruption and public decisions in a representative democracy this paper analyzes how corruption alters policy decisions in democracy and examines whether this distortion can result in a long term persistence of corruption even when the voters are well informed and rational by applying a citizen candidate model of representative democracy the paper analyzes how corruption distorts the allocation of resources between public and private consumption altering the policy preferences of elected and nonelected citizens in opposite directions the outcome is a reduction in real public expenditure and if the median voter s demand for public goods is sufficiently elastic a reduction in taxes in this case some citizens benefit indirectly from corruption the paper also presents some empirical evidence that in democratic countries corruption results in lower tax revenue and proceeds to show that when this occurs citizens anticipating a shift in preferences in favor of public expenditure may support institutions that favor corruption this result complements the findings of other studies that have attributed the persistence of corruption in democracy to some failure on the part of the voters or the electoral system it also bears implications for developing effective anticorruption strategies and for redefining the role that can be played by the international community

institutional quality thresholds and the finance growth nexus using an innovative threshold estimation technique this study examines whether the growth effect of financial development in countries with distinct levels of institutional development differs the results demonstrate that there is a threshold effect in the finance growth relationship specifically we found that the impact of finance on growth is positive and significant only after a certain threshold level of institutional development has been attained until then the effect of finance on growth is nonexistent this finding suggests that the financial development growth nexus is contingent on the level of institutional quality thus supporting the idea that better finance i e financial markets embedded within a sound institutional framework is potent in delivering long run economic development

inequality and media capture abstract popular support of redistributive policies depends on information they have about the tax system and efficiency of public projects mass media provides a convenient means for manipulating public opinion even when voters understand that the media can be biased i develop a theory of media capture in which the rich can influence information published in a media outlet at a cost the model shows that higher inequality is associated with lower media freedom this effect is stronger in democratic regimes i find empirical support for the model in both panel data and cross country analysis

the worldwide governance indicators six one or none abstract aggregate indexes of the quality of governance covering large samples of countries have become popular in comparative political analysis few studies examine the validity or reliability of these indexes to partially fill this gap this study uses factor confirmatory factor and path analysis to test both measurement and causal models of the six worldwide governance indicators they purportedly measure distinct concepts of control of corruption rule of law government effectiveness rule quality political stability and voice and accountability rather than distinguishing among aspects of the quality of governance we find that they appear to be measuring the same broad concept

measuring corruption in china an expenditure based approach using household survey data most existing micro level empirical analyses of corruption rely on administrative records special purpose surveys or field experiments which can be difficult or very costly to obtain in some situations in this paper we apply an expenditure based method of quantifying the extent of corruption in a particular country using household survey data this method utilizes discrepancies between consumption and reported income to measure corruption another contribution of this paper is that it provides the first objective estimate of the extent of corruption in china we use a quadratic clothing expenditure function to estimate the extent of corruption in china in 2002

bureaucratic corruption and income evidence from the land sector in bangladesh we examine for the first time the effects of corruption on income using household survey data from a developing country estimating the effects of corruption on income is challenging because of the simultaneous relationship between the two variables we use a two step instrumental variable approach to identify the effects of corruption on income we find that after adjusting for simultaneity bias the act of bribery reduces income and that higher bribes have a negative effect on income taken together our results provide a possible explanation why a vicious cycle between corruption and income inequality does not exist in the land sector in bangladesh

is trust the missing root of institutions education and development we report evidence that trust is the missing root relating education institutions and economic development we observe that more trust both increases education and improves legal and bureaucratic institutions which in turn spurs economic development we substantiate this intuition with a series of regressions that provide evidence that trust determines both education and the quality of institutions and that education and institutions in turn affect gdp per capita

tariffs and load management a post privatisation study of the uk electricity supply industry an electric utility can influence its customers load by providing financial incentives through the prices charged for electricity at different times of use by designing discriminatory time of use tariffs in which the price of electricity corresponds to the marginal cost of supply a utility provides appropriate signals to the customer to increase consumption of electricity at off peak periods the utilization of off peak electricity results in the improvement of power system load factor which is an indicator for the utilities to decide to defer investment in new generating and transmission capacity the need to utilize off peak electricity provides ample justification for the investigation of the determinants of the off peak demand functions customers response to discriminatory prices and their implication to system load management using the econometric approach this paper reports a study of the british experience in the field of tariffs and load management in the case of the privatised electricity supply industry the results of this study may be applicable to the regional electricity companies in the uk the utilities in several developing countries may find this study relevant if they decide to restructure their industry for increasing efficiency and tariff for implementing load management instead of arbitrary load shedding

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

regional inequalities fiscal decentralization and government quality abstractregional inequalities fiscal decentralization and government quality regional studies there are theoretical arguments supporting the view that regional income inequalities the degree of fiscal decentralization and the quality of government are simultaneously determined this article argues that existing empirical work has failed to deal adequately with this possibility in light of this it applies a simultaneous equation model which accounts for the joint determination of these three variables to a panel of 23 organisation for economic co operation and development oecd countries the empirical evidence that emerges from the analysis suggests that a process of fiscal decentralization accompanied by measures to improve the quality of government would be an effective strategy for reducing regional inequalities

who owns the media the authors examine patterns of media ownership in 97 countries around the world they find that almost universally the largest media firms are controlled by the government or by private families government ownership is more pervasive in broadcasting than in the printed media government ownership is generally associated with less press freedom fewer political and economic rights inferior governance and most conspicuously inferior social outcomes in education and health the adverse effects of government ownership on political and economic freedom are stronger for newspapers than for television the adverse effects of government ownership of the media do not appear to be restricted solely to instances of government monopoly the authors present a range of evidence on the adverse consequences of state ownership of the media state ownership of the media is often argued to be justified on behalf of the social needs of the disadvantaged but if their findings are correct increasing private ownership of the media through privatization or by encouraging the entry of privately owned media can advance a variety of political and economic goals especially those of meeting the social needs of the poor

egalitarianism and international investment abstract this study identifies how country differences on a key cultural dimension egalitarianism influence international investment flows a society s cultural orientation toward egalitarianism is manifested by intolerance for abuses of market and political power and a desire for protecting less powerful actors we show egalitarianism to be based on exogenous factors including social fractionalization dominant religion circa 1900 and war experience from the 19th century we find a robust influence of egalitarianism distance on cross national flows of bond and equity issuances syndicated loans and mergers and acquisitions an informal cultural institution largely determined a century or more ago egalitarianism exercises its effect on international investment via an associated set of consistent contemporary policy choices but even after controlling for these associated policy choices egalitarianism continues to exercise a direct effect on cross border investment flows likely through its direct influence on managers daily business conduct

mises hayek and corruption using the arguments of ludwig von mises and friedrich august von hayek i argue that private ownership solves the economic problem of corruption since private ownership discourages entrepreneurs from rent seeking and privately owned media provide objective and unbiased information to citizens any legal reform establishing and enforcement of private ownership also solves the corruption problem

the effect of decentralized governance on timber extraction in european russia good governance is often promoted for economic growth but its impact on natural resource use in developing and transitional economies is not well understood for example many scholars promote improved governance as a means to slow resource use whereas others have found that better governance increases extractive resource activities in this paper we use within country variation in russia to test the impact of governance on timber harvesting using a reduced form fixed effects model and satellite based estimates of forest cover we find a statistically significant and non linear effect of governance on the area of timber harvested for a marginal improvement in governance timber harvesting increases but this effect decreases at high levels of governance these results are robust to alternative specifications and when instrumenting for economic growth governance could impact timber harvesting in russia through ownership risk i e tenure security through the costs of doing business i e bribes or both nonparametric regressions and qualitative evidence suggest that both factors are at play in russia this analysis provides additional evidence that improving governance may increase natural resource extraction this has important implications for policy prescriptions that suggest good governance will slow resource use in developing and transitional economies

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

explaining international and intertemporal variations in income inequality this paper explores the propositions that income inequality is relatively stable within countries and that it varies significantly among countries a new and expanded data set provides broad support for both propositions drawing on a political economy and capital market imperfection arguments to explain the intertemporal and international variation in inequality the empirical analysis shows that the predicted variables associated with the first argument a measure of civil liberties and the initial level of secondary schooling and the second argument a measure of financial depth and the initial distribution of land are indeed important determinants of inequality this paper explores two propositions regarding income inequality they are first income inequality is relatively stable within countries and second it varies significantly across countries to illustrate note that the gini coefficient in india remained almost constant for forty years 1951 92 with mean 32 6 and standard deviation 2 0 2 in contrast the variation in gini coefficients across countries is large 61 9 in honduras in 1968 compared with 17 8 in bulgaria in 1976 if substantiated these propositions have potentially significant implications for poverty the significance of the first is obvious barring any fundamental socio political change poverty reduction will depend crucially on the rate of economic growth given this the significance of the second is that in inegalitarian economies the poor will enjoy a smaller share of any national increment in income than in more egalitarian ones drawing on a new and expanded data set on inequality deininger and squire 1996a the first of the paper s three sections conducts standard statistical tests of the two propositions the sample comprises 573 observations on the most common measure of inequality the gini coefficient for 49 developed and developing countries covering the period 1947 94 the results broadly confirm our two propositions specifically analysis of variance anova shows that about 90 of the total variance in the gini coefficients

collectivism and corruption in bank lending this paper examines how national culture and collectivism in particular influences corruption in bank lending we hypothesize that interdependent self construal and particularist norms in collectivist countries lead to a higher level of lending corruption through their influence both on the interactions between bank officers and bank customers and on the dynamics among bank colleagues using a sample covering 3835 firms across 38 countries we find strong evidence that firms domiciled in collectivist countries perceive a higher level of lending corruption than firms domiciled in individualist countries in terms of economic magnitude the effect of collectivism is substantially larger than the effects of other cultural dimensions uncertainty avoidance masculinity and power distance and institutional factors identified in prior studies bank supervision bank competition information sharing and media monitoring we further find that the positive relationship between collectivism and lending corruption is not driven by endogeneity and that it is robust to different measures of bank corruption different measures of collectivism and different estimation methods finally we find that the link between collectivism and lending corruption cannot be explained by the role of the government in the economy political connections biased responses from disgruntled borrowers or relationship lending