Embezzlement versus bribery

C. Simon FAN, Chen LIN, Daniel TREISMAN

Research output: Working paperWorking paper seriesWorking Paper

Abstract

Corrupt officials can use their positions to enrich themselves in two ways. They can steal from the state budget--embezzling or misspending funds--or they can demand extra payments from citizens in return for services--bribery. In many circumstances, embezzlement is less distortionary than bribery. We analyze the tradeoff for governments in deciding how strictly to monitor and punish these two kinds of bureaucratic misbehavior. When bribery is more costly to economic development, governments may tolerate some embezzlement in order to reduce the extent of bribery--even though embezzlement is generally easier to detect. Embezzlement serves as a parallel to the "efficiency wage." This logic appears to hold in China, where misappropriation of public funds by officials appears to be ubiquitous.

Original languageEnglish
Place of PublicationMassachusetts
PublisherNational Bureau of Economic Research
Number of pages38
DOIs
Publication statusPublished - Nov 2010

Publication series

NameNBER Working Paper Series
PublisherNational Bureau of Economic Research
No.16542

Fingerprint

corruption
wage
budget
citizen
efficiency
China
demand
economics

Cite this

FAN, C. S., LIN, C., & TREISMAN, D. (2010). Embezzlement versus bribery. (NBER Working Paper Series; No. 16542). Massachusetts: National Bureau of Economic Research. https://doi.org/10.3386/w16542
FAN, C. Simon ; LIN, Chen ; TREISMAN, Daniel. / Embezzlement versus bribery. Massachusetts : National Bureau of Economic Research, 2010. (NBER Working Paper Series; 16542).
@techreport{c9f61d11ac2a4c9d9b4f5c153695f611,
title = "Embezzlement versus bribery",
abstract = "Corrupt officials can use their positions to enrich themselves in two ways. They can steal from the state budget--embezzling or misspending funds--or they can demand extra payments from citizens in return for services--bribery. In many circumstances, embezzlement is less distortionary than bribery. We analyze the tradeoff for governments in deciding how strictly to monitor and punish these two kinds of bureaucratic misbehavior. When bribery is more costly to economic development, governments may tolerate some embezzlement in order to reduce the extent of bribery--even though embezzlement is generally easier to detect. Embezzlement serves as a parallel to the {"}efficiency wage.{"} This logic appears to hold in China, where misappropriation of public funds by officials appears to be ubiquitous.",
author = "FAN, {C. Simon} and Chen LIN and Daniel TREISMAN",
year = "2010",
month = "11",
doi = "10.3386/w16542",
language = "English",
series = "NBER Working Paper Series",
publisher = "National Bureau of Economic Research",
number = "16542",
address = "United States",
type = "WorkingPaper",
institution = "National Bureau of Economic Research",

}

FAN, CS, LIN, C & TREISMAN, D 2010 'Embezzlement versus bribery' NBER Working Paper Series, no. 16542, National Bureau of Economic Research, Massachusetts. https://doi.org/10.3386/w16542

Embezzlement versus bribery. / FAN, C. Simon; LIN, Chen; TREISMAN, Daniel.

Massachusetts : National Bureau of Economic Research, 2010. (NBER Working Paper Series; No. 16542).

Research output: Working paperWorking paper seriesWorking Paper

TY - UNPB

T1 - Embezzlement versus bribery

AU - FAN, C. Simon

AU - LIN, Chen

AU - TREISMAN, Daniel

PY - 2010/11

Y1 - 2010/11

N2 - Corrupt officials can use their positions to enrich themselves in two ways. They can steal from the state budget--embezzling or misspending funds--or they can demand extra payments from citizens in return for services--bribery. In many circumstances, embezzlement is less distortionary than bribery. We analyze the tradeoff for governments in deciding how strictly to monitor and punish these two kinds of bureaucratic misbehavior. When bribery is more costly to economic development, governments may tolerate some embezzlement in order to reduce the extent of bribery--even though embezzlement is generally easier to detect. Embezzlement serves as a parallel to the "efficiency wage." This logic appears to hold in China, where misappropriation of public funds by officials appears to be ubiquitous.

AB - Corrupt officials can use their positions to enrich themselves in two ways. They can steal from the state budget--embezzling or misspending funds--or they can demand extra payments from citizens in return for services--bribery. In many circumstances, embezzlement is less distortionary than bribery. We analyze the tradeoff for governments in deciding how strictly to monitor and punish these two kinds of bureaucratic misbehavior. When bribery is more costly to economic development, governments may tolerate some embezzlement in order to reduce the extent of bribery--even though embezzlement is generally easier to detect. Embezzlement serves as a parallel to the "efficiency wage." This logic appears to hold in China, where misappropriation of public funds by officials appears to be ubiquitous.

U2 - 10.3386/w16542

DO - 10.3386/w16542

M3 - Working paper series

T3 - NBER Working Paper Series

BT - Embezzlement versus bribery

PB - National Bureau of Economic Research

CY - Massachusetts

ER -

FAN CS, LIN C, TREISMAN D. Embezzlement versus bribery. Massachusetts: National Bureau of Economic Research. 2010 Nov. (NBER Working Paper Series; 16542). https://doi.org/10.3386/w16542