Educational Corruption and Growth

Educational corruption is a worldwide phenomenon yet its impact on economic growth is unclear. In this paper we formulate a macroe-conomic model to explore the impact educational corruption may have on growth, educational attainment, and the education wage premium. We find that our model can produce a negative relationship between economic growth and educational corruption as well as a positive re-lationship between the education wage premium and educational cor-ruption. We find empirical support for these relationships in a cross-section of countries. In addition to this fact, our model also produces a negative relationship between the level of educational attainment and educational corruption as found in the data. To add to a recent line of literature on social status and its implications for growth, we show that attaching status to education can be growth enhancing in countries that experience low to medium levels of educational cor-ruption but growth reducing in countries that experience high levels of educational corruption. We also show that borrowing constraints can exacerbate the impact educational corruption has on economic growth, the wage premium, and educational attainment rates. Do not cite without permissio