How Might Higher Pay Lead to Less Corruption by Public Officials? Essay Example

How might higher pay lead to less corruption by public officials? How would you test such a proposition?

The question that higher pay could lead to lesser levels of corruptibility in public officials is a debatable issue. The empirical study conducted by (Van Rijckeghem and Wedder) supported the view that paying higher wages to public officials would lead to lower levels of corruptibility. The above authors used cross country data to determine the outcome of their study that corruptibility was higher in countries where public officials received lower wages compared to manufacturing wages. According to (Ul-Haque and Ratna), lower wages offered to public positions would attract incompetent individuals who are more likely to be corrupt and are dishonest in which situation the government resulting would be inefficient and corrupt in a non-transparent manner. Also, another possibility is that when public officials are paid lesser comparable to their private counterparts, the moral costs of corruption are minimum.

The degree of corruptibility of public officials varies with the fairness implication of salaries of those officials. Moral costs of corruption are directly and indirectly impacted by the distribution of salaries to public officials in comparison to their private counterparts. For instance, bribe-taking is the direct impact of the above difference in salaries. Bribe-taking tries to reduce the asymmetry between the incomes; however induces additional unfairness; which together depend on the level of difference in wages. However, negative externalities of corruptibility produce an indirect impact on the population, for instance a tax official makes a favourable decision for taking a bribe where the tax official increases his/her salary while at the same time the moral costs increase as those who suffer from such biased decisions are impoverished even further.

The proposition that higher wages to public officials would reduce levels of corruption can be tested through analysis of country wide data. The fair salary hypothesis can be tested by also including its analysis against shirking similar to that of (Van Rijckeghem and Wedder). Data from different countries with differing economy levels should be obtained from public and government databases. The experiment however requires more time as the data should be obtained from reliable sources and will need to be tested comparatively. The data should be obtained as to what amount of salary is treated as ‘fair’ salary amount in that particular country.

The salary level that is perceived to crowd out corruptibility should be extrapolated against that amount which costs for corruption, however, the moral costs are difficult to estimate. The cross-country data should be comparatively analysed to determine whether actually higher salaries of public officials helps in reducing levels of corruption. In order to test the fair salary hypothesis, a hypothetical extrapolation is not sufficient rather there is need for a controlled laboratory experiment. Hence, an experiment should be conducted where observations have to be made regarding the effect of salary differences in a controlled manner. Thus, it is suggested that the fair salary hypothesis testing should be separated from other effects such as shirking. Hence, a useful way of testing the fair salary hypothesis is by estimating the variant of bribery game model recommended by (Abbink, Irlenbusch and Renner). In this type of experiment, the impact on passive subjects (moral costs of corruption) can also be considered; hence two treatments can be conducted where the effect of fair salary can be compared with the effect on moral costs by taking into consideration the wage paid to the workers as well.