Public Choice

, Volume 147, Issue 3–4, pp 377–393 | Cite as

Corruption is bad for growth (even in the United States)

  • Noel D. Johnson
  • Courtney L. LaFountain
  • Steven Yamarik
Article

Abstract

We estimate the impact of corruption on growth of output per worker in U.S. states. We improve on existing studies of the cost of corruption by using a better specified empirical model, focusing on a study population that is less likely to be affected by parameter heterogeneity, and controlling for endogeneity using political variables to instrument for corruption. We find that corruption plays a significant and causal role in lowering growth and investment across the states.

Keywords

Corruption Investment Economic growth 

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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  • Noel D. Johnson
    • 1
  • Courtney L. LaFountain
    • 2
  • Steven Yamarik
    • 3
  1. 1.Department of Economics and Mercatus CenterGeorge Mason UniversityArlingtonUSA
  2. 2.Center for Economics, Applied Research and Methods TeamUS Government Accountability OfficeWashingtonUSA
  3. 3.Department of EconomicsCalifornia State University at Long BeachLong BeachUSA

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