This paper uses a human capital earnings equation to quantify administrative corruption in the public sector. Regression analyses are conducted based on information from surveys administered to public officials in Albania. After accounting for officials� characteristics, e.g., schooling, experience, gender, type of agency, and public and private sectors� features, we deduce that the administrative corruption was on average 2.6 times officials� current salary in Albania, which is equivalent to 16.7% of the country�s GDP.

Omer Gokcekus and Amy Muedin, Quantifying Corruption by a human capital earnings equation, forthcoming in the International Review of Economics. My thanks to Omer for sending this along to me.

Albania is 84th of the 99 countries surveyed for corruption by Transparency International. Think about that -- 1/6th of the production of Albania is estimated to be handed over to government officials in return for favors.

Labels: economics