Who is Hurt By Corruption in the United States?

brown-envelope-money-bribe-1-1384589-mWhat is the economic impact of corruption? And who is hurt most by these misguided acts? Author Adriana S. Cordis discusses this topic in her article “Corruption and Composition of Public Spending in the United States” from Public Finance Review.

The abstract:

I investigate the relation between corruption and the composition of state government spending in the United States. The analysis reveals that the United States is not immune to the adverse effects of corruption documented in cross-country studies. Corruption lowers the share of state governmentPFR_72ppiRGB_powerpoint spending devoted to higher education and raises the share of spending devoted to other and unallocable budget items. These results are robust to the use of political variables to instrument for corruption. There is also some evidence that corruption lowers the share of spending on corrections and public welfare and raises the share of spending on health and hospitals, housing and community development, and natural resources.

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