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Jobs for Sale: Corruption and Misallocation in Hiring

  • Jeffrey Weaver
American Economic Review
vol. 111, no. 10, October 2021
(pp. 3093-3122)
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Abstract

Corrupt government hiring is common in developing countries. This paper uses original data to document the operation and consequences of corrupt hiring in a health bureaucracy. Hires pay bribes averaging 17 months of salary, but contrary to conventional wisdom, their observable quality is comparable to counterfactual merit-based hires. Exploiting variation across jobs, I show that the consequences of corrupt allocations depend on the correlation between wealth and quality among applicants: service delivery outcomes are good for jobs where this was positive and poor when negative. In this setting, the correlation was typically positive, leading to relatively good performance of hires.

Citation

Weaver, Jeffrey. 2021. "Jobs for Sale: Corruption and Misallocation in Hiring." American Economic Review, 111 (10): 3093-3122. DOI: 10.1257/aer.20201062

Additional Materials

JEL Classification

  • D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
  • I11 Analysis of Health Care Markets
  • J16 Economics of Gender; Non-labor Discrimination
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J45 Public Sector Labor Markets
  • M51 Personnel Economics: Firm Employment Decisions; Promotions
  • O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements