Working Paper

The Transition of Corruption: From Poverty to Honesty


  • Gundlach
  • E.
  • Paldam
  • M.
Publication Date

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.


JEL Classification
B25, O1

Key Words

  • biogeography
  • corruption
  • Long-run growth