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Education, corruption, and the distribution of income

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Abstract

We examine how the interaction between education and corruption affects institutional reform and economic development. While corruption reduces average income and education, education increases not only output and hence potential corruption rents, but also produces more informed electorates that better monitor government actions. We find that economies with intermediate levels of education remain in a poverty trap since the level of skills creates sufficient corruption rents but not enough monitoring. Economies with low or high levels of education can escape the poverty trap, and inequality plays a key role in determining whether this occurs through a change in institutions or an expansion of education.

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Authors and Affiliations

  1. University of Washington, Seattle, Washington, USA

    Theo Eicher

  2. GREQAM and CNRS, 2 rue de la Charité, 13002, Marseille, France

    Cecilia García-Peñalosa

  3. GREQAM and CEPR, Marseille, France

    Tanguy van Ypersele

Authors
  1. Theo Eicher
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  2. Cecilia García-Peñalosa
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  3. Tanguy van Ypersele
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Corresponding author

Correspondence to Cecilia García-Peñalosa.

Additional information

We are grateful to seminar participants at the European University Institute, GREQAM, the Paris School of Economics, the University Carlos III of Madrid, and the 2007 PEGNet conference, as well as to four anonymous referees and the editor of this journal. This work was partly supported by the French National Research Agency Grant ANR-08-BLAN-0245-01.

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Eicher, T., García-Peñalosa, C. & van Ypersele, T. Education, corruption, and the distribution of income. J Econ Growth 14, 205–231 (2009). https://doi.org/10.1007/s10887-009-9043-0

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  • DOI: https://doi.org/10.1007/s10887-009-9043-0

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