The impact of an unexpected wage cut on corruption: Evidence from a “Xeroxed” exam

Oana Borcan, Mikael Lindahl, Andreea Mitrut

Research output: Contribution to journalArticle

14 Citations (Scopus)
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Abstract

This paper aims to understand how corruption responds to an income loss. We exploit an unexpected 25% wage cut incurred in 2010 by all Romanian public sector employees, including the public education staff. We investigate a corruptible high-stake exam taking place shortly after the wage announcement. To measure corruption we compare changes in exam outcomes from 2007 to 2010 between public and private schools, as the latter were not affected by the policy. We find that the wage loss induced better exam outcomes in public than in private schools and we attribute this difference to increased corruption by public educators.
Original languageEnglish
Pages (from-to)32-47
Number of pages16
JournalJournal of Public Economics
Volume120
Early online date15 Aug 2014
DOIs
Publication statusPublished - Dec 2014

Keywords

  • austerity measures
  • bribes
  • public school principals
  • high-stakes exams

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