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Prof. Erwin Bulte: “Corruption, Investments and Contributions to Public Goods: Experimental Evidence from Rural Liberia”

Prof. Erwin Bulte

Wageningen University and Tilburg University, The Netherlands

Authors: Gonne Beekman, Erwin Bulte, and Eleonora Nillesen

Abstract: 

We analyse how corruption affects incentives to invest in private goods and contribute to public goods.  We measure corruption of community leaders in a sample of Liberian communities by keeping track of a flow of project inputs, and use this information to explain variation in investment behavior of villagers using artefactual field experiments.  Our main results are that corruption (i) undermines incentives for voluntary contributions to local public goods and (ii) reduces private investments of individuals subject to informal taxation by the chief in real life.  Corruption crowds out investment incentives especially in ethnically heterogeneous communities.

Keywords: Corruption, leadership, field experiments

JEL Codes: C9, K42, O12, O17, Z13.

Full Text: “Corruption, Investments and Contributions to Public Goods: Experimental Evidence from Rural Liberia”