and improve the economic mobility of the children from poor families.

However, corruption is endemic in schools in developing countries (see various annual and country reports by Transparency International).<sup>4</sup> In Bangladesh about half of the households reported paying some form of bribe for children’s education (Transparency International Bangladesh, 2010). Evidence from a seven country study in Africa by the World Bank shows that 44 percent of parents had to pay illegal fees to send their children to school (see World Bank (2010)).<sup>5</sup> According to a New York Times report, bribery is rife not only in school admissions in China, even the front row seats in the classroom are up for sale.<sup>6</sup> The focus of this paper is on the following question: How does corruption in schools in the form of bribes paid for educational services such as admission, stipend etc. a¤ect poor families? We provide evidence that bribe taking by teachers in schools a¤ects poor households disproportionately; poor parents are more likely to pay bribes for education of their children, and among the bribe payers, the poor pay more as a share of their income. This is a perverse outcome, opposite to the goal of making education free for the poor. The ‘free’schooling seems free only for the richer households as they are not likely to pay bribes, while the poor still pay for their children’s schooling.<sup>7</sup> To guide the empirical work, we use a simple model of bribe taking by teachers in a context where households are heterogenous in terms of their economic status as measured by income.<sup>8</sup> An important assumption in many corruption models is that the probability and the severity of punishment for taking bribes are determined by an impersonal and unbiased legal and enforcement system. This delivers the prediction that bribes are progressive at the extensive margin, i.e, the poor are less likely to be asked for (and pay) bribes. However, the assumption that the ability to punish a corrupt teacher does not vary across poor and rich households is clearly at odds with reality in a developing country.<sup>9</sup> Because higher income (and wealth) confers signi...cant

> 4 The Global Corruption Report (2013) examined corruption in education sector including admission and fee payments in supposedly free publich schools in developing countries in detail. The report, for instance, states that "corruption acts as an added tax on the poor, who are frequently plagued by demands for bribes, particularly when they are trying to access basic services such as education."

> 5 The countries in the study are: Ghana, Madagascar, Morocco, Niger, Senegal, Sierra Leone and Uganda.

> 6 “A Chinese Education, for a Price”, New York Times, November 21, 2012.

> 7 It is important to appreciate that bribery in public schools is thus more regressive than a market based education system. In a marketplace, everyone pays the same price, irrespective of their economic status, under the plausible assumption that school fees are not used for price discrimination according to ethnicity, income etc.

> 8 Note that our framework is designed for the analysis of bribery faced by households, and may not be suitable for understanding bribery faced by ...rms.

> 9 For an interesting discussion on the role played by socioeconomic status in determining who pays bribes to

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