Corrupt government hiring is common in developing countries; hires pay bribes averaging 17 months of salary

Weaver, Jeffrey. 2021. "Jobs for Sale: Corruption and Misallocation in Hiring." American Economic Review, 111 (10): 3093-3122. Oct 2021. https://www.aeaweb.org/articles?id=10.1257/aer.20201062

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.