Corruption is bad for growth (even in the United States)
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- Johnson, N.D., LaFountain, C.L. & Yamarik, S. Public Choice (2011) 147: 377. doi:10.1007/s11127-010-9634-5
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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.