Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus
Corruption and Social Capital
Abstract: I examine the causal relation between social capital and
corruption. A simple model illustrates potential mechanisms and yields
testable implications, which I estimate in a sample of European countries.
The estimated effect of social capital on corruption is found to be robust
to the inclusion of a number of other variables and supplementing the
sample with slightly older data from non-European countries. The evidence
of the reverse causal direction is weak. I suggest that it is possible to
build social capital through investing in education, interest in society
and some level of income redistribution, which in turn reduces
Keywords: Corruption; Illegal behavior; Rent-seeking; Social capital; (follow links to similar papers)
JEL-Codes: D72; K42; Z13; (follow links to similar papers)
31 pages, January 7, 2003
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