Bureaucratic corruption and the rate of temptation: do wages in the civil service affect corruption, and by how much?

This paper presents what is to our knowledge the first empirical estimate o f the effect of pay in the civil service on corruption. First, we show that theory is ambiguous on the relationship between civil-service pay and corr uption, Then, we examine the issue using a new data set on wages for low-in come countries. We find evidence of a statistically and economically signif icant relationship between relative civil-service pay and corruption in reg ressions based on cross-country averages, where we control for a wide array of variables. The relationship implies that a rather large increase in wag es is required to eradicate corruption solely by raising wages. (C) 2001 El sevier Science B.V. All rights reserved.