Working Paper

The Transition of Corruption: From Poverty to Honesty

Kiel Working Papers, 1411

Measures of corruption and income are highly correlated across countries. We use prehistoric measures of biogeography as instruments for modern income levels to identify an exogenous long-run income effect. We find that our corruption-free incomes explain the cross-country pattern of corruption just as well as actual incomes. This result suggests that the long-run causality is exclusively from income to corruption. As countries get rich, corruption vanishes and there is a transition of corruption from poverty to honesty.


Erich Gundlach
Martin Paldam


Publication Date
JEL Classification
B25, O1