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Authors:

• Yijiang WANG
  Carlson School of Economics University of Minnesota

• Wei CHI
  Department of Economics Kansas State University

Complementing studies of corruption at country and industry levels, we construct a theoretic model to study the rationality of the individual government official’s corruption decisions. The model examines how personal factors, e.g., education and age, and institutional factors, e.g., rank and office, affect the cost and benefit analysis of the official’s corruption decisions. A unique data set is used to test the predictions of the model. The findings include that government officials with personal factors less favorable for further promotions, e.g., those with less education, are more corrupt, because of smaller opportunity cost. Those with greater power, e.g., those who are in higher ranks or more powerful offices, tend to be more corrupt, because of greater gains to be made from being corrupt. These findings are quite consistent with the predictions of the theoretic model.