corruption are 157% higher than standard estimates. This is due to the combination of a rise in the perception of visits by 49% and a rise in the perception of corruption on a visit of 72% (2.57 approximately equals 1.49 times 1.72). In other countries, Turkey, for example, there is no change in the perception of visits and all the rise in effective corruption is due to an increase in the perception of levels of corruption on an official's visit.

# **2. The Data**

We implement our methodology using data from surveys conducted by the World Bank Enterprise Survey unit (WBES, 2015) on Bangladesh, India, Nigeria, Peru, Sri Lanka, Turkey, and the Ukraine. Over the past several years, with the generous cooperation of the WBES team, we have placed forced-response random-response questions in these surveys. Each survey polled business owners or top managers in a sample of officially registered firms that is representative of the economy's formal private manufacturing and services sectors.<sup>4</sup> Interviews were conducted face-to-face and covered a wide range of topics, including corruption. The data from the seven surveys were collected in different waves of the WBES between 2007 and 2014. Information on the timing of interviews, the type of interview, and the number of observations included in our analysis for each country is given in Table 1. Full details of the subsample of firms used in the analysis are given in Appendix A.

We use responses to two types of question. The first is a two-step conventional question (CQ) regarding whether an interaction with a government official occurred and if it did whether a bribe interaction took place. Two-step questions with this structure are very common in survey work, appearing for example in the surveys conducted by Transparency International, the World Justice Project, the US Federal Reserve, the US Agency for International Development, and the World Health Organization, as well as the Gallup World Poll and the National Crime Victimization Survey.<sup>5</sup> In the World Bank’s Enterprise Surveys, there are a number of such questions with identical structure, varying only in the type of official who is the subject of enquiry. The example used in this paper concerns interactions with tax officials, a question that is in the core questionnaire for the World Bank’s Enterprise Surveys and has been asked in a large number of countries. This two-step CQ asks whether

> 4 Full details of the methodology can be found at http://www.enterprisesurveys.org/methodology.  Stratified random sampling was used, with strata based on firm size, geographical location, and economic sector. Given the small sample size and the oversampling of some industries, the pattern of sampling weights is highly skewed. To prevent a small number of firms with very high weights from dominating our results, we report unweighted results throughout the paper. As a result, our results should be interpreted as representative only of the sample of firms in the data.

> 5 See, for example, Transparency International's survey for the Global Corruption Barometer <u>http://files.transparency.org/content/download/604/2549/file/2013_GlobalCorruptionBarometer_EN.pdf, the</u> questions on gambling in the Fed's Survey of Household Economics and Decisionmaking <u>http://www.federalreserve.gov/econresdata/2014-economic-well-being-of-us-households-in-2013-appendix2.htm, the questions on health behaviour in the World Health Survey of the WHO http://www.who.int/healthinfo/survey/en/, the World Justice Project's questions on corruption http://worldjusticeproject.org/sites/default/files/gpp_2013_final.pdf, the questions on unwanted sexual acts in</u> the National Crime Victimization Survey http://www.bjs.gov/index.cfm?ty=dcdetail&iid=245, and the questions on sexual behaviour in the Demographic and Health Surveys of USAID http://dhsprogram.com/What-We-Do/Survey- <u>Types/DHS-Questionnaires.cfm.</u>

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