2015
DOI: 10.1080/13504851.2015.1076137
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Does corruption increase or decrease employment in firms?

Abstract: We use representative data for firms for Latin American firms and show that corruption decreases employment in firms. This result is robust to changes in specification and also consistent with the use of an instrumental variables approach. Corruption appears to negatively impact the growth and wealth in a country, not by introducing labor distortion in firms, but by keeping them small.

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Cited by 24 publications
(11 citation statements)
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“…As a solution, we employ region–sector–size averages as benchmark firm‐specific instruments. This approach, which has been introduced by Friedman () and reviewed by Angrist and Krueger (), is a widely recognized practice in the literature (Amissah & Stack, ; Ayyagari et al., ; Beltrán, ; De Rosa, Gooroochurn, & Görg, ; De Waldemar, ; Desai & Olofsgård, ; Fisman & Svensson, ) to address endogeneity problems when using perception based measures as explanatory variables. In taking grouped averages, it is unlikely that a firm's individual performance affects the perception of other companies within the same group (region–sector–size), implying that the “direction of causality is likely to run from the average obstacles to individual firms, not vice versa” (Ayyagari et al., , p. 499); satisfying the exclusion restriction assumption.…”
Section: The Most Damaging Constraint To Firm Growthmentioning
confidence: 99%
“…As a solution, we employ region–sector–size averages as benchmark firm‐specific instruments. This approach, which has been introduced by Friedman () and reviewed by Angrist and Krueger (), is a widely recognized practice in the literature (Amissah & Stack, ; Ayyagari et al., ; Beltrán, ; De Rosa, Gooroochurn, & Görg, ; De Waldemar, ; Desai & Olofsgård, ; Fisman & Svensson, ) to address endogeneity problems when using perception based measures as explanatory variables. In taking grouped averages, it is unlikely that a firm's individual performance affects the perception of other companies within the same group (region–sector–size), implying that the “direction of causality is likely to run from the average obstacles to individual firms, not vice versa” (Ayyagari et al., , p. 499); satisfying the exclusion restriction assumption.…”
Section: The Most Damaging Constraint To Firm Growthmentioning
confidence: 99%
“…Public awareness of environmental problems (Gifford and Nilsson, 2014) is another important factor influencing perceptions regarding businesses, as it affects attitudes and skills among members of the local community and other stakeholders (Frank et al, 2017). The economic relationship between firms and communities can influence local perceptions for enterprises especially considering their impact on employment rates (Beltran, 2016). As regards demographic factors, previous studies have revealed that educational level is a significant parameter as those with higher education tend to be more aware of environmental issues (Chawla and Cushing, 2007;Read et al, 1994).…”
Section: Theoretical Backgroundmentioning
confidence: 99%
“…The effect of corruption on firms (Shleifer and Vishny 1994), (Acemoglu & Verdier, 2000), (SimeonDjankov et al 2003), (Svensson 2003), (Faccio 2006), (Goel, Budak, and Rajh 2014), (Beltrán 2015), (Dove 2017).…”
Section: Streammentioning
confidence: 99%