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The impacts of corruption on wage inequality and rural–urban migration in developing countries

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Abstract

This paper establishes three-sector general equilibrium models and separately investigates how sector-biased corruption influences the wage rates of skilled and unskilled workers, the wage inequality, and the amount of unskilled rural–urban migrants in developing countries. Corrupt activities are introduced in our theoretical models as transaction costs. We find that the reductions in different sector-biased corrupt behaviors exert different impacts through various economic mechanisms. In addition, the change in urban unskilled unemployment due to the decrease in the degree of sector-biased corruption is also taken into account.

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Notes

  1. We would like to express our thanks to a reviewer who encourages us to make such a sector-based comparison.

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Acknowledgments

We would like to thank the Editor Euijune Kim and two anonymous reviewers for their helpful comments and suggestions. Pi acknowledges the financial support provided by the Program for New Century Excellent Talents in University and the Fundamental Research Funds for the Central Universities. Any remaining errors are ours.

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Authors and Affiliations

  1. Department of Economics, School of Business, Nanjing University, 22 Hankou Road, Nanjing, 210093, People’s Republic of China

    Jiancai Pi

  2. Graduate School of Economics, Osaka University, 1-7 Machikaneyama, Toyonaka, Osaka, 560-0043, Japan

    Yu Zhou

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  1. Jiancai Pi
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Correspondence to Jiancai Pi.

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Pi, J., Zhou, Y. The impacts of corruption on wage inequality and rural–urban migration in developing countries. Ann Reg Sci 54, 753–768 (2015). https://doi.org/10.1007/s00168-015-0674-0

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  • DOI: https://doi.org/10.1007/s00168-015-0674-0

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