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.
- Long-run growth