Three Essays on the Economics of Corruption

In this dissertation, I explore topics involving the measurement of political corruption and its effect on economic outcomes both across and within countries. The first chapter of this dissertation provides an introduction to the economics of corruption and summarizes the crucial existing research. This chapter describes how this dissertation contributes to the existing research and provides an outline for the following chapters. Chapter 2 examines the conditional effect of corruption on growth across a sample of countries. In this second chapter, I argue that the effect corruption has on economic growth depends on the uncertainty involved. Employing data on a cross-section of counties, this paper uses an interaction between the frequency of bribery payments and the uncertainty regarding the delivery of the service in exchange for these bribes, to show that, overall, corruption has a negative impact on growth, unless the uncertainty is minimal. Chapter 3 examines the effect of corruption and informal sector employment on income across 476 Brazilian municipalities to estimate whether corruption impacts GDP or income levels once variation in informal economic activity is taken into account. Overall, I find that higher levels of corruption and a larger informal economy are generally associated with poor economic outcomes. However, only the size of the informal economy has a statistically significant effect. Chapter 4 examines the most commonly used measure of corruption in the U.S. and shows how this measure is influenced by political factors. Lastly, Chapter 5 summarizes the findings from Chapter 2 through Chapter 4. Additionally, Chapter 5 discusses policy recommendations and future research projects involving the economics of corruption