tax structure and corruption cross country evidence one common feature of the current literature on corruption especially the empirical contributions to it is the emphasis on the exogenous determinants of corruption which are generally beyond the direct control of governments to date little is known about how the design of government policy potentially affects the level of corruption in a country even though there is growing recognition that the design and administration of tax and spending policies play important roles in promoting or discouraging corrupt practices using a large sample of countries over the 1995 2009 period this paper fills the gap by conducting the first analysis in the literature to examine the significance of the tax structure as measured by both tax mix and tax complexity in determining corruption our results suggest the following 1 countries relying more heavily on direct taxes tend to exhibit less corruption than countries that rely more heavily on indirect taxes and 2 countries with more complex tax systems tend to be more corrupt than countries with less complex tax systems these results are robust across alternative measures of corruption and tax structure and alternative estimations with and without correcting the potential endogeneity issue of the tax structure variables

urban spatial structure urban structure is increasingly characterized by decentralization dispersion and multiple employment centers much is known empirically about such patterns and about how the interplay between agglomerative and dispersive forces generates spatial structures that are complex and prone to multiple equilibria and dynamic path dependence these forces operate at different spatial scales many entail unpriced interaction and external scale economies deriving from product differentiation and endogenous technical change appear particularly important because these forces interact in complex ways inefficiencies in urban structure are resistant to simple policy interventions

the culture of corruption tax evasion and economic growth this study uses a dynamic general equilibrium model to quantify the effects of corruption and tax evasion on fiscal policy and economic growth the model is calibrated to match estimates of tax evasion in developing countries the calibrated model is able to generate reasonable predictions for net tax rates the corruption associated with public investment projects and the negative correlation between corruption and tax revenue the presence of corruption and evasion is shown to have significant but not large negative effects on economic growth the relatively moderate effects help explain the absence of a robust negative correlation between growth and corruption in cross country data the model also implies that cracking down on tax evasion before addressing corruption can be a bad idea and that higher wages for public officials can improve welfare jel h3 o4

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

endogenous corruption in a neoclassical growth model abstract the following paper presents a simple neoclassical growth model where corruption is an endogenous result of competition between a public agent and a private agent the model provides a simple theoretical framework in which the level of corruption as well as the effects of corruption on income consumption and growth are identifiable bureaucratic red tape is then added to the model the results suggest that a priori corruption is neither efficiency enhancing nor efficiency detracting with respect to growth but always results in some income redistribution

individual morality and reputation costs as deterrents to tax evasion abstract empirical evidence suggests some taxpayers never evade evasion increases with the tax rate and evasion decisions are interdependent these findings are not easily explained by the existing theory which models evasion as an independently made amoral gamble this paper uses nonpecuniary costs of evasion to reconcile theory with evidence once individuals are assumed to differ by an honesty characteristic taxpayers dichotomise into groups the more honest of which responds to a tax change as the evidence suggests a further extension is to introduce an endogenous reputation cost this suggests a positive relationship between the number of evaders and the tax rate

bribery inefficiency and bureaucratic delay abstract we examine bribery in a dynamic setting with a partially honest bureaucracy the presence of honest officials lowers the bribe that a corrupt official can extract from efficient applicants consequently efficient applicants may face delays in receiving licenses or may never receive licenses as inefficient applicants are serviced ahead of them an increase in the proportion of honest officials while directly increasing the incidence of socially optimal decisions can also induce greater inefficiencies misallocation and delay from corrupt officials as a result social welfare may be non monotonic in the proportion of honest officials and small differences in monitoring costs may lead to very different levels of corruption competition between officials can hurt efficiency its desirability depends on the prevalence of applicants ability to pay bribes

regulation and corruption higher levels of government expenditures and more regulation naturally invite corruption because they provide the opportunity for government officials to be paid off for regulatory favors subsidies and government contracts some countries have relatively large governments but lower levels of corruption scandinavian countries offer examples while institutional differences may explain some of the cross country differences in corruption the most consistent relationship is that high levels of regulation are associated with more corruption when looking at the effect of the size of government it is the regulatory state rather than the productive or redistributive state that is associated with corruption

money for nothing politicians rent extraction and political extortion introduction the model 1 background the economic theory of regulation 2 rent extraction the theory of political extortion demonstrations 3 observing extortion the practice of rent extraction 4 validating the model empirical tests of rent extraction 5 contracting for rent preservation the durability problem extensions 6 extraction and optimal taxation excises earmarked taxes and government user charges 7 costs and benefits of interest group organization 8 improving the model worthy yet unanswered questions notes references index

empirical determinants of corruption a sensitivity analysis many variables have been proposed by past studies as significant determinants of corruption this paper asks if their estimated impact on corruption is robust to alteration of the information set a global sensitivity analysis based on the leamer s extreme bounds analysis gives a clear answer five variables are robustly related to corruption corruption is lower in richer countries where democratic institutions have been preserved for a long continuous period and the population is mainly protestant corruption is instead higher where political instability is a major problem finally a country s colonial heritage appears to be a significant determinant of present corruption

corruption and destructive entrepreneurship the negative effects of corruption at the macro level are well documented corruption reduces economic growth lowers investment and erodes trust in government officials creating an institutional environment that pushes entrepreneurs from productive to destructive activities corruption also has effects at the micro level because some industries are better situated to profit from corruption than others corruption not only lowers economic output but also shifts resources toward some industries and away from others using federal convictions in the usa as a measure of corruption regression results show that increased corruption shifts resources toward the construction industry and away from the education industry and professional scientific and technical service industry the evidence also shows that the distance from state capitals and voter turnout moderate the relationship between corruption and firm concentrations

paying politicians theory and evidence this paper looks at the theory behind the idea that paying politicians better will improve their performance the paper lays out a political agency model with adverse selection and moral hazard where politicians are subject to two period term limits this model provides a number of predictions about how the pay of politicians affects agency problems we also consider what happens when the pool of politicians is endogenous the main ideas in the model are confronted with data on u s governors jel d72 j33

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

a theory of wages and labor demand with intra firm bargaining and matching frictions this article provides a model of labor market equilibrium with search and within firm strategic bargaining we yield explicit closed form solutions with heterogeneous labor inputs and capital the solution exhibits overemployment we show that higher relative bargaining power for some groups of workers may lead to overemployment relative to other groups with such other groups being underemployed instead if they have a lower relative bargaining power similarly the hold up problem between capitalists and employees does not necessarily lead to underinvestment in physical capital beyond the neo classical analysis firms are the field of several strategic interactions between capital owners and labor between marginal employees and incumbents and more generally between different groups with various bargaining positions within the firm it is usually considered that the bargaining power of workers entails an employment level that is lower than in a competitive labor market and any increase in the bargaining power of workers raises unemployment these results are true for a wide class of models and notably in the now standard framework to analyze unemployment namely search and matching models of pissarides 2000 however stole and zwiebel 1996a 1996b show that the above results are totally changed in the intra firm bargaining model where employees engage in individual wage negotiation with the firm in fact under the assumption that contract incompleteness does not enable either party to commit to future wages and employment decisions they show that intra firm bargaining yields no rent for employees and gives rise to overemployment compared to a competitive labor market the basic idea of stole and zwiebel is that a firm with a diminishing marginal productivity of labor can decrease the bargained wage which increases in the marginal productivity of labor by raising employment in stole and zwiebel s setting firms overemploy strategically up to the point where workers get their reservation wage

corruption inequality and fairness bigger governments raise the possibilities for corruption more corruption may in turn raise the support for redistributive policies that intend to correct the inequality and injustice generated by corruption we formalize these insights in a simple dynamic model a positive feedback from past to current levels of taxation and corruption arises either when wealth originating in corruption and rent seeking is considered unfair or when the ability to engage in corruption is unevenly distributed in the population this feedback introduces persistence in the size of the government and the levels of corruption and inequality multiple steady states exist in some cases

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 regulatory quality and corruption on residential electricity prices in the context of electricity market reforms abstract the european electricity markets have been undergoing significant regulatory reforms since the introduction of the first liberalisation directive in 1996 theory predicts that liberalisation promotes cost efficient production and competition and hence leads to lower prices the goal of this paper is to assess the impact of regulatory quality and non compliance with the law on electricity prices in the context of electricity market reforms we address problems of endogeneity by using the blundell blond system gmm estimator and find that vertical integration and market concentration lower end user prices all else equal moreover improving regulatory quality and reducing corruption both have a negative impact on prices when holding other factors constant the intensity of the reforms has limited impact on electricity prices when these reforms are introduced in an institutional environment characterised by high levels of corruption and low quality regulation

a multi objective robust optimization model for multi product multi site aggregate production planning in a supply chain under uncertainty abstract manufacturers need to satisfy consumer demands in order to compete in the real world this requires the efficient operation of a supply chain planning in this research we consider a supply chain including multiple suppliers multiple manufacturers and multiple customers addressing a multi site multi period multi product aggregate production planning app problem under uncertainty first a new robust multi objective mixed integer nonlinear programming model is proposed to deal with app considering two conflicting objectives simultaneously as well as the uncertain nature of the supply chain cost parameters of the supply chain and demand fluctuations are subject to uncertainty then the problem transformed into a multi objective linear one the first objective function aims to minimize total losses of supply chain including production cost hiring firing and training cost raw material and end product inventory holding cost transportation and shortage cost the second objective function considers customer satisfaction through minimizing sum of the maximum amount of shortages among the customers zones in all periods working levels workers productivity overtime subcontracting storage capacity and lead time are also considered finally the proposed model is solved as a single objective mixed integer programming model applying the lp metrics method the practicability of the proposed model is demonstrated through its application in solving an app problem in an industrial case study the results indicate that the proposed model can provide a promising approach to fulfill an efficient production planning in a supply chain

a multi phase mathematical programming approach for effective supply chain design abstract a supply chain is an alliance of independent business processes such as supplier manufacturing and distribution processes that perform the critical functions in the order fulfillment process effective design and management of supply chains assists in production and delivery of a variety of products at low cost high quality and short lead times although the importance of supply chain design is emphasized in the literature few formal decision models have been proposed for this purpose this paper presents a multi phase mathematical programming approach for effective supply chain design more specifically the methodology develops and applies a combination of multi criteria efficiency models based on game theory concepts and linear and integer programming methods model application and insights are detailed through numerical illustrations

understanding the city size wage gap in 2000 wages of full time full year workers were more than 30 percent higher in metropolitan areas of over 1 5 million people than rural areas the monotonic relationship between wages and city size is robust to controls for age schooling and labor market experience in this paper we decompose the city size wage gap into various components we propose an on the job search model that incorporates latent ability search frictions firm worker match quality human capital accumulation and endogenous migration between large medium and small cities counterfactual simulations of the model indicate that variation in returns to experience and differences in wage intercepts across location type are the most important mechanisms contributing to the overall city size wage premium steeper returns to experience in larger cities is more important for college graduates while differences in wage intercepts is more important for high school graduates sorting on unobserved ability within education group and differences in labor market search frictions and distributions of firm worker match quality contribute little or slightly negatively to observed city size wage premia in both samples

corruption as an occupational choice endogenous corruption and tax policy corruption is endemic in many countries and empirical studies have demonstrated how it impacts on macroeconomic indicators theoretical studies have generally assumed an exogenously given proportion of the population are corrupt or that the public sector is fixed in size far fewer explore how corruption emerges endogenously we endogenize corruption as an occupational choice workers choose private or public employment public employees can be honest or corrupt corruption is subject to a social sanction that results in a loss of self esteem those who care little about the social sanction choose to be corrupt when a firm meets a corrupt public employee it pays a bribe to secure a reduction in the tax rate the economy has two self sustaining equilibria with different levels of corruption corruption reduces tax revenue and the tax rate that maximizes revenue an increase in the social sanction reduces corruption but also reduces tax revenues if the economy is in a high corruption equilibrium paying a wage premium to public sector workers can result in all public sector workers being corrupt public sector audits to detect corrupt workers always reduce corruption but can only increase welfare when they are cheap to conduct and the economy is in a low corruption equilibrium

small is beautiful motivational allocation in the non profit sector we build an occupational choice general equilibrium model with for profit firms non profit organizations and endogenous private warm glow donations lack of monitoring on the use of funds implies that an increase of funds of the non profit sector because of a higher incomein the for profit sector a stronger preference for giving or an inflow of foreign aid worsens the motivational composition and performance of the non profit sector we also analyze the conditions under which donors through linking donations to the motivational composition of the non profit sector non profits themselves through peer monitoring or the government using a tax financed public funding of non profits can eliminate the low effectiveness equilibrium we present supporting case study evidence from humanitarian emergencies and developing country ngo sector and humanitarian emergencies

the survival of the welfare state this paper provides an analytical characterization of markov perfect equilibria in a model with repeated voting where agents vote over distortionary income redistribution a key result is that the future constituency for redistributive policies depends positively on current redistribution since this affects both private investments and the future distribution of voters the model features multiple equilibria in some equilibria positive redistribution persists forever in other equilibria even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period skill biased technical change makes the survival of the welfare state less likely

persistent court corruption levels of court corruption differ widely across the world to give just one example in a recent survey of firms in transition economies the proportion of respondents who answered that firms in their line of business never have to make additional payments to deal with the courts ranged from 86 8 in hungary to just 37 2 in albania a second notable feature of court corruption is its persistence over time in spite of almost universal condemnation of the phenomenon and frequent government anti corruption campaigns this article presents a simple model that explains both the variation and persistence of corruption the main argument is as follows a major role of the legal system is to provide incentives to individuals to take or abstain from certain actions this is true of regulation criminal law contract law and tort law alike however when courts are corrupt the incentive effect provided by court enforced fines and other penalties is reduced to maintain incentives higher penalties are required but these higher penalties in turn raise the bribes that court officials can extract since the stakes to winning a court case are now higher finally higher bribes make court employment more attractive to dishonest individuals which raises the corruptibility of the court loosely speaking then corruption and penalties are complements corruption necessitates higher penalties while higher penalties engender corruption the feedback effect just described gives rise to the possibility of multiple equilibria that is apparently similar countries can have very different levels of court corruption one country may have a relatively honest pool of court officials and a low level of penalties while a second country may have the opposite moreover if a country in a high corruption equilibrium attempts to shift to using smaller penalties the immediate effect is a fall in the incentives provided by the legal system as such a country can find itself stuck in a high corruption equilibrium

corruption and democracy abstract most models and empirical tests of the relationship between corruption and democracy assume corruption falls as democracy matures yet recent theoretical developments and case evidence suggest an inverted u relationship between the two although so far no one has tested for this relationship by drawing on a panel data set covering a large number of countries between 1982 1997 substantial empirical support is found for an inverted u relationship between the durability age of democracy and corruption fortunately the turning point in corruption occurs rather early in the life of new democracies between 10 12 years

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

urban spatial structure transport related emissions and welfare in this paper we study the effects of urban design on pollution and welfare we build a theoretical model of residential choices with pollution externalities arising from commuting where the size of the central business district cbd and the demand for housing are endogenous we show that a polycentric city is desirable from welfare and ecological perspective provided that travel speed and or the number of roads directly connected with the cbd are sufficiently high the spatial extension of cities remains the critical variable to curb transport related urban pollution

corruption extortion and evasion corruption evasion and the abuse of power and the possibility thereof are pervasive features of economic activity a prominent instance is tax collection this paper examines the implications of corruptibility and the potential abuse of authority for the effects and optimal design of potentially non linear tax collection schemes amongst the findings are that the distributional effects of evasion and corruption are unambiguously regressive under the kinds of schemes usual in practice and collecting progressive taxes without inducing evasion or corruption may require that inspectors be paid commission on high income reports but not on low with the cost of this potentially creating what seems to be a previously unnoticed trade off between equity and efficiency

the energy implications of city size and density abstract this paper develops a new open city urban simulation model capable of showing the urban form and energy consumption effects of variation in city size the model is able to consider city size differences caused by wage and amenity differentials both with and without housing and land use regulation the surprising conclusion is that per capita energy use is relatively invariant to city size when growth is driven by wages but falls modestly with growth induced by rising amenity common land use policies specifically density limits and greenbelts can positively or negatively affect both city welfare and energy use

intra urban wage variation employment location and commuting times abstract theory predicts that within a metropolitan area employers located where there is difficult commuting will have to compensate their workers with appropriately higher wages this should hold whether one is comparing central city work locations with those at the fringe or simply differences between suburban edge cities in the longer run if employers are concerned primarily with labor costs firm mobility should equalize wages or else agglomeration economies must exist to sustain the differences using microdata from the 1990 census for 2 large metropolitan areas in the u s wage equations are estimated for urban workers allowing for different wage levels depending on zone of employment the results show that observationally equivalent workers have wages that vary substantially across employment zones within a metro area and that this variation is strongly and significantly correlated with the average commute time of the workers employed in that zone these results hold across several different econometric specifications wages and average travel times also are found to be highly correlated with the aggregate number of workers in each zone but are not affected by zone employment specialization thus there is inconclusive evidence as to whether wage commuting cost differences result from equilibrium agglomeration effects or from a disequilibrium distribution of employment

a robust optimization model for cellular manufacturing system into supply chain management abstract in this paper a new mathematical model is presented for a cellular manufacturing system into supply chain design with labor assignment this paper considers important manufacturing features thoroughly such as multiple plant locations multi market allocations with production planning and various part mix the proposed model aims at minimizing the total cost of holding inter cell material handling external transportation fixed cost for producing each part in each plant machine and labor salaries it is assumed that the demands of products are uncertainty in three scenarios optimistic pessimistic and normal also a robust optimization approach is then developed to solve the proposed model and find the best solution the robustness and performance of the proposed model are explained in terms of an industrial case from a typical equipment manufacturer this case study provides the researchers and practitioners to better understand the importance of designing robust optimization and cell formation in the supply chain management from a practical point of view

are compact cities environmentally friendly there is a wide consensus among international institutions and national governments in favor of compact i e densely populated cities as a way to improve the ecological performance of the transport system indeed when both the intercity and intra urban distributions of activities are given a higher population density makes cities more environmentally friendly because the average commuting length is reduced however when we account for the possible relocation of activities within and between cities in response to a higher population density the latter may cease to hold indeed an increasing density policy affects prices wages and land rents which in turn incentivizes firms and households to change place this reshapes the urban system in a way that may generate a higher level of pollution thus although an increase in compactness is environmentally desirable when locations are given compactness may not be environmentally friendly when one accounts for the general equilibrium effects generated by such a policy

more politicians more corruption evidence from swedish municipalities in the literature on political economy and public choice it is typically assumed that government size correlates positively with public corruption the empirical literature however is inconclusive owing to both measurement problems and endogeneity this paper creates a corruption index based on original data from a survey covering top politicians and civil servants in all swedish municipalities the effect of more politicians on corruption problems is analyzed using discontinuities in the required minimum size of local councils despite the fact that sweden consistently has been ranked among the least corrupt countries in the world the survey suggest that non trivial corruption problems are present in sweden municipalities with more local council seats have more reported corruption problems and the regression discontinuity design suggests that the effect is causal