Causes of corruption: Evidence from China

This study explores the causes of corruption in China using provincial panel data. Using both fixed effects and instrumental variables approaches, we find that provinces with greater anti-corruption efforts, higher educational attainment, historic influence from Anglo-American church universities, greater openness, more access to media, higher relative wages of government employees and a greater representation of women in the legislature are markedly less corrupt; whereas social heterogeneity, regulation and resources abundance breed substantial corruption. We also find that fiscal decentralization depresses corruption significantly. Finally, we identify a positive relationship between corruption and economic development in China, which is driven primarily by the transition to a market economy.

► We study the causes of corruption in China with provincial panel data. ► Educational attainment, trade openness and news media curb provincial corruption. ► Fiscal decentralization and high relative wages of officials prevent corruption. ► Social heterogeneity, regulation and resource abundance breed regional corruption. ► Economic development has a positive effect on corruption in current China.