2016年-世界发展银行全球_Dynamic_Relationship_between_Corruption_and_Youth_Unemployment___Empirical_Evidences_from_a_System_GMM_Approach_23页_881kb

Dynamic Relationship between Corruption and Youth Unemployment: Summary

Core Content

This paper investigates the dynamic relationship between corruption and youth unemployment using a System GMM approach. It aims to provide empirical evidence on how corruption practices in government institutions, particularly those involving bribes to access job opportunities, affect the efficiency of labor force allocation and, in turn, sustain the very causes of corruption.

Main Views

The paper presents two main perspectives on the relationship between corruption and youth unemployment:

1. Corruption and Resource Allocation

   • Corruption within government institutions leads to the misallocation of labor resources, diverting them from productive sectors to less efficient ones where officials have more discretion.
   • Officials are incentivized to select candidates who pay the highest bribes, regardless of their qualifications. This results in unqualified candidates being favored, which reduces the overall productivity of the labor force.
   • The lack of accountability and weak institutional frameworks enable officials to engage in corrupt practices without fear of detection or punishment.
   • This creates a vicious cycle where corruption perpetuates unemployment and vice versa, as unemployed youth are forced to bribe officials to secure jobs.

2. Sustaining Corruption through Labor Market Distortion

   • The mismatch between supply and demand in the labor market can sustain corruption by giving new economic actors more incentive to adopt corrupt practices.
   • In a monopolistic public sector with limited competition, officials have greater power to dictate job selection, increasing the likelihood of bribery.
   • Low-skilled job seekers are more likely to bribe officials to gain employment, especially when the official's decision-making is not subject to scrutiny.
   • Corruption reduces the efficiency of the labor market, leading to a misallocation of human capital and a decline in economic productivity.

Key Information

• Empirical Methodology: The paper uses a System GMM approach to account for endogeneity and reverse causality in the relationship between perceived bribery and youth unemployment.

• Data and Time Period: The analysis is based on data from 96 countries over the period 1985–2008.

• Variables Considered:

  • Corruption Index: Based on perceived corruption levels.
  • Youth Unemployment Rate: Measured as the unemployment rate among educated job seekers.
  • FDI/GDP: As an indicator of foreign investment and its impact on labor market dynamics.
  • Inflation Rate: Reflecting the real wage deterioration of government officials.
  • Worker's Right Index: Capturing the degree of labor market protection.

• Findings:

  • After controlling for macroeconomic and institutional factors, the development of corruption practices increases youth unemployment.
  • This increased unemployment sustains the corrupt practices as job seekers are forced to bribe officials to secure employment.
  • Institutional weakness, low wages, and lack of political pluralism are key factors that contribute to the persistence of corruption and its negative effects on the labor market.

Conclusion

The paper concludes that corruption distorts the labor market and leads to suboptimal allocation of human capital, which in turn reinforces corrupt behaviors. It emphasizes the need for strong institutions, transparent governance, and political accountability to break the cycle of corruption and youth unemployment. The System GMM approach is highlighted as a useful tool to analyze such dynamic and complex relationships.

Key Hypotheses

• Hypothesis 1: Corruption leads to the misallocation of labor resources, favoring less qualified candidates and increasing youth unemployment.
• Hypothesis 2: Labor market distortion, particularly due to monopolistic public sector practices, sustains and encourages corruption.
• Hypothesis 3: Institutional quality, political pluralism, and real wage levels significantly influence the relationship between corruption and youth unemployment.

Figures and Data

• Figure 1: Illustrates the negotiation zone for bribes, showing how the amount of bribe depends on the level of competition and the probability of being uncovered.
• Figure 2: Demonstrates the positive correlation between the corruption index and the youth unemployment rate, supporting the hypothesis of a causal link between the two variables.

Institutional and Policy Implications

• Institutional reforms are necessary to reduce the monopolistic power of officials and to increase transparency and accountability.
• Political pluralism and opposition activity can play a crucial role in detecting and curbing corruption.
• Regulatory reforms that reduce the discretionary power of officials may help in reducing corruption and improving labor market efficiency.

References

• Leff, N. (1964): "Economic Development through Bureaucratic Corruption."
• Ades, A. & Di Tella, G. (1997): Empirical evidence on the relationship between corruption and job selection.
• Tanzi, V. (1998): Discusses the impact of low wages on corruption.
• Shleifer, A. & Vishny, R. (1993): Argues that corruption leads to misallocation of labor.
• Van Rijckeghem, C. & Weder, B. (1997): Examines the incentives for officials to engage in corruption.
• Treisman, D. (2000): Notes the difficulty in measuring corruption.
• Lacko, M. (1996): Compares common law and civil law systems in terms of their effectiveness in preventing corruption.
• Cingranelli, P. & Richards, T. (2010): Provides the Worker's Right Index as a proxy for labor market protection.