Money matters: The role of public sector wages in corruption prevention

Abstract

Economic theory as well as conventional wisdom from corruption-ridden countries suggest that low wages among public employees lead to corruption, but cross-sectional empirical research has largely failed to confirm this relationship. In this article, we investigate the relationship between experiences of corruption and wage levels for public sector employees, utilizing both objective and expert survey data, with global coverage. The statistical analysis shows that higher wages, as compared to the average wage in the country, is associated with less corruption. There is also some support, but weaker, for the hypothesis that corruption increases when wages fall below subsistence levels.