Corruption in Russia PDF

Corruption in Russia
Günther G. Schulze    University of Freiburg

Bambang Suharnoko Sjahrir    University of Freiburg
Nikita Zakharov    University of Freiburg
Abstract
We analyze the determinants of corruption in Russia using law enforcement
data on corruption incidents for a panel of 79 Russian regions for the period
2004–13. We find that the relative salaries of bureaucrats determine corruption
levels: corruption declines as relative salaries rise, yet at strongly diminishing
rates. Furthermore, we show that even very limited media freedom helps to cur-
tail corruption. Other important determinants are the strength of law enforce-
ment, education levels, and unemployment rates.
1. Introduction
Low salary levels of public officials have long been regarded as one of the root
causes of corruption among public officials (see, among others, Palmier 1985;
Mauro 1997; World Bank 1997; Kaufmann 1997). Underpaid civil servants seek-
ing to make ends meet or to achieve an income comparable to that of their peers
in the private sector may be tempted to accept bribes in exchange for favors, such
as government contracts, nonprosecution, easier licensing, and so forth.1 Increas-
ing the remuneration of public officials has therefore been a key element of anti-
corruption strategies in many countries.2 The prime example of the success of this
strategy is Singapore, which became one of the world’s least corrupt countries af-
ter increasing public officials’ salaries significantly and introducing complemen-
tary measures (Quah 2001).
Most theoretical contributions have supported the negative relationship be-
We are indebted to Sam Peltzman and an anonymous referee for advice; we are also grateful to
Maryana Antipova, Bernd Fitzenberger, Krisztina Kis-Katos, and Judith Müller for helpful com-
ments and to Jakob Schulze for significant input. The usual disclaimer applies.
1
Governments lacking adequate funds to pay their employees may rely on civil servants to sup-
plement their incomes through corrupt activities (Besley and McLaren 1993). McLeod (2008) argues
that civil servants in Indonesia under President Soeharto were deliberately underpaid and expected
to increase their income through corruption, which made them a part of a corrupt system that ben-
efited the ruling family.
2
For instance, Peru, Argentina, Georgia, Nepal, and Ghana (Tanzi 1998; Transparency Interna-
tional Georgia 2011; Regmee 2001; Chand and Moene 1999).
[ Journal of Law and Economics, vol. 59 (February 2016)]

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136 The Journal of LAW & ECONOMICS
tween the relative salaries of public officials and the level of corruption. Start-
ing with Becker and Stigler (1974), they have made efficiency-wage types of ar-
guments—better-paid civil servants have more to lose (Cadot 1987; Andvig and
Moene 1990; Bond 2008) and greater motivation and loyalty, as they are treated
more fairly (Akerlof 1982; Akerlof and Yellen 1986). Bond (2008) suggests that
high pay attracts honest individuals, thus improving the pool of candidates for
public positions.
Yet Besley and McLaren (1993) show that raising civil service pay may actually
increase corruption under certain conditions. Superauditors, responsible for the
detection and prosecution of corruption, may be corruptible themselves. When
the civil service is better paid, the superauditors can extract higher rents when
agreeing not to prosecute corrupt officials and thus may be more inclined to en-
gage in this type of corruption. This may lead to a lower probability of detec-
tion and higher overall corruption levels. Sosa (2004) shows that higher salaries
can lead to more corruption if higher income reduces risk aversion sufficiently
(and if penalties are not too high). It has long been recognized in labor economics
that increased wealth may erode work incentives. For instance, Thiele and Wam-
bach (1999) show in a principal-agent model that a wealthier agent will create a
smaller surplus for the principal if the absolute risk aversion of the agent is rela-
tively high compared to the degree of absolute prudence of the principal. Gneezy
and Rustichini (2000) provide empirical evidence for a nonmonotonic relation-
ship between wages and productivity. Since the opportunity-cost effect and the
risk-attitude effect of higher wages are not mutually exclusive, the net effect is not
clear a priori and may change sign over the relevant range. Mookherjee (1997)
provides a model in which the wage-effort relationship has an inverted U shape;
for our context his reasoning suggests a U-shaped relationship between the rela-
tive salaries of public officials and the level of corruption. Thus, given the number
of different theoretical predictions, economic theory does not provide clear guid-
ance on what the relationship between salary levels of public officials and corrup-
tion levels may look like, which makes the question essentially an empirical issue.
Yet there is no clear consensus in the empirical literature either. Van
Rijckeghem and Weder (2001) find a significant negative relationship in a panel
data set comprising 31 developing countries for the period 1982–94. This rela-
tionship, however, disappears when the authors look at within-country variations
(using fixed-effects regressions). They use manufacturing wages as the reference
remuneration and perceptions of corruption assembled in the International
Country Risk Guide as a measure for corruption. Other cross-national studies
such as Treisman (2000), Rauch and Evans (2000), and Pellegrini and Gerlagh
(2008) find no significant effect. While insightful, these studies may potentially
suffer from unobserved heterogeneity—countries may differ in dimensions not
(sufficiently) controlled for that affect corruption and are correlated with the
variables of interest, such as the quality of institutions, general attitudes, cus-
toms, and traditions. Moreover, for want of better internationally comparable
data, they use perceptions of corruption as the measure of corruption. Percep-

Corruption in Russia 137
tion data have been widely criticized for lack of validity (Knack and Keefer 1995;
Golden and Picci 2005; Seligson 2006, Liu 2012). Perceptions of what constitutes
corruption and how severe it is, whether they are held by experts or by the pop-
ulation at large, strongly vary across countries and are influenced by culture, tra-
ditional norms, and individual attitudes (Bertrand and Mullainathan 2001). Un-
surprisingly, they have been shown to reflect the true extent of corruption very
inaccurately (Mocan 2008; Donchev and Ujhelyi 2014). In a natural experiment,
Olken (2009) finds that Indonesian villagers’ perceptions of corruption in a road
construction project are only weakly correlated with more objective measures of
missing expenditures (especially for material inputs). These findings cast doubt
on the validity of perception-based studies of the determinants of corruption.
Recently, a small literature has emerged that analyzes the determinants of cor-
ruption at the national or subnational level using law enforcement data. This ap-
proach has two distinct advantages: First, studies using within-country variation
suffer much less from unobserved heterogeneity and thus from omitted-variable
biases, as unobserved determinants of corruption like institutions, tradition, his-
tories, and so forth, are much more similar, if not equal. Second, law enforce-
ment data are much more reliable, as they do not suffer from perception biases.
Goel and Rich (1989) use conviction rates of corrupt officials at federal, state,
and local levels in the United States and find that differences between the sala-
ries of public officials and of middle-grade accountants affect the conviction rate.
Goel and Nelson (1998) employ a US cross-state data set of convictions among
public officials and find that high salaries reduce corruption. Glaeser and Saks
(2006) use federal corruption conviction rates in the 50 US states and find that
states whose populations are richer and better educated are less corrupt, as are
those with lower levels of inequality and racial dissimilarity. They do not include
a measure of civil servants’ relative salary. Contrary to Goel and Rich (1989) and
Goel and Nelson (1998), Karahan, Razzolini, and Shughart (2006) find that cor-
ruption among the supervisors responsible for the governance of 82 counties in
Mississippi is significantly positively correlated with their remuneration. Finally,
Alt and Lassen (2010) find inconclusive support for a (negative) relationship be-
tween public officials’ pay and corruption across American states; a significant
negative relationship is found only in the absence of fixed effects in the regression
model.
While most of the literature focuses on the United States, Di Tella and Schar-
grodsky (2003) analyze corruption in public procurement in Argentina and find
that, conditional on monitoring effort, high civil service wages decrease corrup-
tion. Del Monte and Papagni (2007) analyze the determinants of corruption in
Italy and find that government consumption, level of development, and political
culture influence corruption. Dong and Torgler (2013) use province-level data on
registered cases of corruption in China to show that anticorruption campaigns,
trade openness, media access, fiscal decentralization, and higher salaries for gov-
ernment employees decrease corruption, while social heterogeneity, natural re-
sources, and regulation increase it.

Our paper contributes to this literature but differs in important aspects. First,
we investigate the determinants of corruption in the Russian Federation using
law enforcement data. Russia is a particularly interesting case: It is the ninth-
largest country in the world and a former superpower, and it is geographically
and socioeconomically very diverse. Corruption is rampant. In the recent Cor-
ruption Perception Index (CPI) compiled by Transparency International (TI),
Russia ranks 136 out of 175 countries surveyed in 2014.3 Its federal structure and
high geographical differentiation allow for a sound econometric analysis at the
subnational level. Despite this, very little has been written on corruption in Rus-
sia from an economic perspective. Dininio and Orttung (2005) use experience-
based corruption data to measure corruption but do not include the relative
salary of public officials in their regressions. Given their small sample size of 40
observations in a cross-sectional approach (for 2002) and the missing variable of
interest, their findings are of limited use for our purposes.
Second, we investigate whether a nonlinear relationship between public offi-
cials’ relative salaries and corruption exists. Even though the notion of a U-shaped
relationship between public wages and corruption has been suggested in the the-
oretical literature (as discussed above; see Besley and McLaren 1993; Mookher-
jee 1997; Thiele and Wambach 1999; Sosa 2004), empirical studies have included
relative wages of public officials only as a linear term, which disregards the pos-
sibility of a sublinear or even nonmonotonic influence of relative wages on cor-
ruption levels. We allow for such a possibility. Not only are our data conducive to
a panel analysis; we are also able to use measures of relative salary that are much
more precise than the broad measures used in cross-country analyses. We com-
pare public officials’ remuneration to salaries in business counseling—an occupa-
tion that requires a skill set very similar to that of public officials.
Third, we analyze whether, in a country that has no free press by international
standards, even relative freedom of the press (hereafter, press freedom) affects
the level of corruption. Press freedom has been shown to reduce corruption in
cross-country analyses (Brunetti and Weder 2003; Chowdhury 2004; Freille,
Haque, and Kneller 2007), and information provided by newspaper campaigns
was found to reduce leakage of funds from government programs in Uganda
(Reinikka and Svensson 2005). We analyze whether variations in relative press
freedom in a country have the potential to reduce corruption, an issue that has
not been analyzed so far and can be studied only in a semiauthoritarian country
like Russia where restrictions on press freedom can be differently enforced across
regions and over time.
We use a panel data set covering 79 Russian regions and the period 2004–13
that we assembled from various government sources. As a primary measure of
corruption we use corruption incidents registered by the police in a Russian state
or region, data that were recently made available to us by the Russian Ministry
3
See Transparency International, Corruption Perceptions Index, 2014: Results (http://www
.transparency.org/cpi2014/results). The scores range from 0 (most corrupt) to 100 (not corrupt);
Russia’s score is 27.

of the Interior. We argue that—unlike in the United States—convictions may be

open to political influence and thus less reliable as a measure than registration of
incidents with the police. However, we use conviction rates as an alternative mea-
sure of corruption.
We find that corruption is negatively related to the level of civil servants’ sala-
ries and that this influence is strongly sublinear. We cannot prove in a strict sense
that the wage-corruption nexus is nonmonotonic, but we cannot exclude this
possibility either. Our results are very robust with respect to the corruption mea-
sure, the salary concept, and the inclusion of different sets of controls. Using data
from the Glasnost Defense Foundation (GDF), an independent nongovernmen-
tal organization (NGO), we find that even limited press freedom reduces corrup-
tion compared to a completely unfree press. Moreover, corruption is determined
by the quality of law enforcement, opportunity costs in the labor market, and the
average education level of the population.
Our paper proceeds as follows. In Section 2, we introduce our data. Section 3
presents our main findings from the panel regressions. Section 4 reports results
using corruption experiences as a different measure of corruption, which corrob-
orates our previous findings. Section 5 reports several robustness checks; notably,
we use conviction rates as an alternative measure of corruption, and we examine
alternative salary concepts. Section 6 concludes.
2. The Data

We investigate corruption in 79 regions in Russia in the period 2004–13. The
time period was chosen because there are no law enforcement data available for
earlier years and because Russia became involved in the Ukrainian conflict and
annexed Crimea in early 2014, which triggered international sanctions and Rus-
sian countersanctions and led to a recession in 2014 (Doronina 2014).
By 2004, the first year of our analysis, Russia had fully recovered from the fi-
nancial crisis of 1998 and had established a market economy. In the first part of
the period examined, the economy grew by around 7 percent per year; it con-
tracted by 7 percent in 2009, following the global financial crisis, and recovered
in the following year, experiencing a modest growth of around 4 percent be-
tween 2010 and 2013.4 The political situation was stable, as federal power was
firmly in the hands of a political elite concentrated around the Russian leader
Vladimir Putin.5,6 Throughout the period, corruption was a major impediment
4
World Bank, Data: GDP Growth (Annual %) (http://data.worldbank.org/indicator/NY.GDP
.MKTP.KD.ZG/countries/1W-RU?display=graph).
5
Even mass social protests against electoral fraud during the parliamentary election in December
2011 were widely regarded as having failed to influence the current political situation (Volkov 2012).
6
Putin, having served as prime minister, became interim president on December 31, 1999, after
Boris Yeltsin’s resignation, and was elected president on March 26, 2000, for his first term. He was
reelected on March 14, 2004, for his second term, which ended on May 7, 2008. As the Russian con-
stitution prohibits three consecutive terms, Dmitry Medvedev served as president from May 7, 2008,
to May 7, 2012, during which time Putin served as prime minister. Putin was reelected as president
on March 24, 2012, and his third term will expire on May 7, 2018. The current prime minister is
Medvedev.

to economic growth, but no radical steps were taken to reduce it except for an
anticorruption campaign initiated by then-president Medvedev, comprising the
National Anti-Corruption Plan introduced in 2009 and the Anticorruption Strat-
egy in 2010. Even though the campaign was ambitious, there was almost no prog-
ress in the fight against corruption, as Medvedev later acknowledged (Lisova and
Kostenko 2011).7
The 79 regions studied account for 99.2 percent of the population.8 They ex-
hibit significant socioeconomic heterogeneity but are homogeneous in terms of
official language, legislation, taxation system, and business regulations. Some re-
gions have the status of a republic; while they have a legal status similar to the
others, they have their own constitution in addition to the national one and are
de facto more independent. They have a strong non-Russian minority or even a
majority with its own official regional language, receive larger transfers from the
center, and show stronger support for Russia’s ruling party than the average re-
gion (Jarocińska 2010).
2.1. Measuring Corruption

As corruption is clandestine and illegal, it cannot be measured accurately; how-
ever, the empirical literature suggests two possible proxies: data on the percep-
tions of corruption and law enforcement data. Indexes of the perception of cor-
ruption are widely used, especially in cross-national analyses, as they are readily
available. Yet they have been strongly criticized for being subjective and biased
(see, among others, Knack and Keefer 1995; Bertrand and Mullainathan 2001;
Seligson 2006; Mocan 2008; Olken 2009; Donchev and Ujhelyi 2011). Criminal
data reported by law enforcement agencies are a more objective measure of cor-
ruption, as they are not based on perceptions but on convictions or other mea-
sures of legal action. However, their quality depends on the quality of law en-
forcement. For this reason, they are appropriate only in within-country studies
of countries where the police force is under central authority and where the le-
gal system, operating procedures, and determination of law enforcement are the
same across all units of observation.9 These proxies have been used for the 50 US
7
For more information about the anticorruption campaign and its results under the Medvedev
presidency, see Ninenko (2012).
8
The Russian Federation currently has 83 administrative regions. Chechenya is omitted because
of the ongoing military conflict there; three autonomous districts are aggregated with neighbor-
ing regions for the official statistics because of data limitations (the autonomous district Nenets is
combined with the Arkhangelsk region, and the districts Khanty-Mansi and Yamalo-Nenets are
combined with the Tyumen region). The 83 regions consist of 21 republics, nine krai, 46 oblast,
two cities of federal importance, one autonomous oblast, and four autonomous districts (okrug). In
2004, there were 89 regions; six small autonomous okrug were merged with the neighboring larger
jurisdictions in 2005 (one), 2007 (three), and 2008 (two). As these districts are very small (often with
fewer than 100,000 inhabitants) and the mergers were already planned in 2004, the Federal State
Statistics Service did not provide separate data for the soon-to-be-merged districts. We therefore use
the current delineation of regions.
9
For this reason, Glaeser and Saks (2006) use data from the Federal Bureau of Investigation rather
than from local or state police.

Figure 1. Dynamics of corruption in Russia (percentage of the value in 2004)
states (Glaeser and Saks 2006; Goel and Nelson 2011; Alt and Lassen 2014); we
use similar data for the 79 Russian regions. In Russia, the police are under cen-
tral control, and thus operating procedures and determination are similar across
regions, yet we control for differences in the resources and efficiency of law en-
forcement (as discussed below).
Our primary corruption measure (CORR) is the number of registered incidents
of bribe acceptance in the region per 10,000 public officials. Russian Criminal
Code (art. 290) defines bribery as the acceptance of money, securities, or other
valuables by a public official (personally or through an intermediary) for his or
her performance (action or inaction) for the benefit of a giver or an affiliated per-
son, if such action implies that the public official exploits his or her position or
authority or installs patronage. This is in line with the conventional definition of
corruption as “the abuse of public power for private gain” (World Bank 1997, p.
XXX). Bribery necessarily implies that a public official is involved as a recipient.
To account for the potential scope of bribe taking, we use the number of public
officials as the denominator of CORR.
When we juxtapose our measure of corruption aggregated at the country level
with the CPI compiled by TI for Russia, we observe similar trends (see Figure 1),
which indicates that the measures may not be too dissimilar. Corruption levels
increased until 2009 and decreased afterward.
Our primary corruption measure, CORR, differs from the conviction rate used
by Glaeser and Saks (2006) and others in three important aspects. First, convic-
tion is a product of completed judicial proceedings, while registering a crime is
only the first stage of criminal prosecution. In an environment in which the judi-
cial system may be corrupted as well (or politicized), conviction rates may be dis-

torted much more than primary criminal statistics, such as the incidence rate that
we use. While the registration decision may be in principle corrupted as well, we
argue that this is much less of an issue, as police officers face the risk of being ac-
cused and prosecuted for failing to register a crime if the person reporting com-
plains to a higher official. It is much easier to protract and effectively sabotage an
investigation in exchange for a bribe through nontransparent and complicated
investigation procedures than not to register a crime, which is an offense that is
easy to prove.10 Second, convictions refer to the number of convicted individuals
independent of the number of cases and not the severity or number of crimes
they have committed, whereas each registered incident corresponds to one de-
tected criminal act. The number of incidents arguably portrays the corruption
landscape better, as it measures the frequency of corruption.11 Third, the time
span required to register an incident is much shorter than that to complete crim-
inal proceedings with a conviction: the legislation relating to criminal procedure
requires the registration of incidents of corruption within 3 days of the moment
of detection or notification. This allows a much timelier fit of the corruption mea-
sure, as an endogenous variable, with the explanatory variables—notably, rela-
tive-salary levels, which change over time. Data about incidents are more respon-
sive than conviction rates to changes in actual corruption levels.
For these reasons, we think that the incident rate is better suited to a panel data
analysis. Nevertheless, we use conviction rates as a secondary corruption mea-
sure in Section 5.1 to investigate if our results are affected by choice of corrup-
tion measure. We obtained both data sets from the Ministry of the Interior for
the period 2004–13. Figure 2 depicts the distribution of incidents (for the pooled
sample).
2.2. Relative Salary

Russia’s bureaucracy has three tiers—federal, regional, and municipal—with
the wages of the federal level set centrally and regional and municipal wages set at
the regional level. The law relating to the civil service states as one of its principles
that remuneration should be comparable across all levels of civil service (Federal
Law No. N79-FZ [July 27, 2004], ch. 10). This principle governs the setting of
the basic, guaranteed part of remuneration, such as pay for the position, grade
of service, or seniority, but only governs to a much lesser degree the payment of
bonuses. Yet there is no clear guidance for the salary level, at either the federal or
the regional level. Gimpelson and Lukiyanova (2009) argue that wages for public
officials are adjusted relatively spontaneously in response to changes in expected
10
Before 2003, the police were paid bonuses solely based on their resolution rate, which might
have created an incentive not to register crimes that are difficult to solve. This practice was discon-
tinued after the Ministry of the Interior initiated a police reform introducing a different motiva-
tional mechanism (Russian Federation 2002).
11
Moreover, conviction data are often quite noisy (Alt and Lassen 2014), not least because one
case can lead to more convictions, making the data lumpy. A potential drawback of data on inci-
dents is that some of the registered incidents of corruption may be unfounded, which might make
the data imprecise.

Figure 2. Distribution of incidents of corruption per region-year
revenues and as a consequence of a bureaucratic bargaining process rather than

with the goal of maintaining a certain wage differential vis-à-vis the private sector
(see also Gimpelson and Kapeliushnikov 2011).
Figure 3 illustrates this point. It displays the recent dynamics in the aggregate
relative salaries of public officials, using an average salary in the economy as the
reference point, and shows that the ratio of public officials’ average salary to the
average salary in the economy has fluctuated substantially over the years. (Of
course, there is substantial variation across regions.) After the economic recovery
following the crisis in 1998, Russia witnessed significant salary increases in nearly
all industries of the private sector, while the public sector lagged behind. After the
presidential election in 2004, civil service salaries were increased starting on Jan-
uary 1, 2005. Although it was not officially announced as an anticorruption mea-
sure, fighting corruption was the most commonly named reason for this increase
in salary (Petrova 2004). The economic downturn after the global financial crisis
of 2008 made the public sector financially more attractive; however, Russia’s fast
recovery and the accompanying growth of salaries in the private sector again re-
duced the salary ratio between the public and private sectors.
Our relative-salary variable (RELSAL) is constructed as the ratio of the average
monthly salary of a public official in the region12 to the average monthly salary in
12
The measure includes all paid salaries and various monetary and nonmonetary compensations
for labor, bonuses, vacation pay, and so forth.

Figure 3. Dynamics of the ratio of public officials’ salaries to average private-sector salaries
in Russia.
a comparable sector, lagged for 1 period. The data on public officials include civil
servants with executive and legislative functions at the federal, regional, and local
levels. These functions include taxation, budget execution, budget and taxation
supervision, customs, procurement, inventory and estate management, socio
economic planning, and governance. The numerator of the ratio reflects the legal
earnings of the potential bribe takers.
The denominator of RESAL reflects the opportunity costs of being a civil ser-
vant (or the remuneration level that a civil servant may deem adequate) and thus
indicates the temptation to accept bribes. While per capita gross domestic prod-
uct (GDP) and average per capita income have been frequently used as a compar-
ison (Treisman 2000; Pellegrini and Gerlagh 2008; Goel and Nelson 1998; Kara-
han, Razzolini, and Shughart 2006), they are extremely aggregate measures and
can be misleading, as they do not portray the remuneration of the group of peo-
ple to whose income civil servants compare their own. Moreover, the GDP per
capita strongly depends on the sector composition of the regional economy, and
therefore differences in relative wages constructed with regional GDP per capita
as the denominator may not reflect differences in opportunity costs but rather
differences in the sector composition of the regions. Civil servants may compare
themselves to workers in the private sector whose occupations require compara-
ble skills. As a solution, Van Rijckeghem and Weder (2001) propose using wages
in the manufacturing sector, but they admit that their measure does not match
the level of skill of the government employees.13
We argue that a natural alternative wage for public officials is the salary level
in business counseling. The skill requirements and level of responsibilities are
comparable, so counseling may be a realistic alternative for public officials. Goel
13
In cross-country studies, data availability often leaves little choice in selecting a comparable re-
muneration, which casts some doubt on the explanatory power of such studies.

and Rich (1989) use a similar strategy by comparing public officials’ pay to that
of middle-grade accountants (as a measure of the average salary of white-collar
professionals in the private sector), assuming that middle-grade accountants may
have skill sets similar to those of the relevant public officials. While we consider
their measure to be preferable to average manufacturing wages or GDP per cap-
ita, we think that in the Russian context salaries in business counseling are more
appropriate because the job requirements and responsibilities are more compa-
rable to those of public officials, who make decisions on a regular basis such as
allocating procurement contracts or issuing licenses to businesses, especially if
they are able to extort bribes. Especially for well-connected people—such as for-
mer bureaucrats—counseling may be an attractive alternative employment, as it
involves helping businesses receive required licenses or contracts.14 According to
the Russian Federal State Statistics Service (FSSS), business counseling incorpo-
rates financial management counseling, the development of accounting and con-
trolling systems, human resources and marketing counseling, consulting about
organizational planning, assessment of tangible and intangible property, public
relations services, project leadership (management and supervision of resource
allocation, quality control, and reporting), services for resolving industrial dis-
putes, and other services pertaining to business operations. Therefore, business
counseling resembles the executive and legislative functions of a government,
since both sectors provide services to the same commercial entities in a region.
Indeed, public salaries are within the same range as salaries in counseling: the av-
erage value of RELSAL is 1.03.15
The variable RELSAL is lagged 1 period. Our data are annual averages, which
means that this year’s relative salary is the average salary of public officials di-
vided by the average salary in business counseling, both averaged over all occupa-
tions in that group and the entire year. Part of the year is in the future, at the time
when an official decides whether to engage in corrupt activities—thus, contem-
poraneous relative salary is unobservable; past relative salaries, in contrast, are
well known. Moreover, some corrupt activities may take time to arrange or to be
revealed, so the decision to engage in corruption may have been taken in the year
before the incident was registered.
Data on the complementary components of civil service pay as the stability of
employment and state pensions is not available. But on average, state employ-
ment is a very steady field, as 44 percent of civil servants have more than 10 years’
experience in municipal or state service (Statistical Newsletter 2005). Pensions,
on the other hand, might be not relevant for reasons of uncertain future, ongoing
pension reform, and high inflation and since pensions are not affected by penal-
ties for bribery.
14
A prime example may be Roman Putin, a first cousin of Vladimir Putin, who opened a con-
sulting agency to promote foreign businesses in Russia, See Roman Putin Consulting (http://www
.putinconsulting.com).
15
We interpolate the data on salaries in business counseling for two missing data points (for Kha-
kassia Republic for 2009 and 2010).

2.3. Other Determinants of Corruption

The primary concern with the criminal data on bribery is to control for the
effectiveness of law enforcement. More effective law enforcement may deter cor-
rupt activities (Becker and Stigler 1974), thereby reducing actual corruption lev-
els. At the same time, it may detect a larger share of existing corruption, leading,
ceteris paribus, to more registered incidents of corruption.16 While the deterrence
effect may take some time to materialize, the second effect may be faster. To cap-
ture both effects, we introduce several measures of law enforcement. The first two
measures pertain to the Ministry of the Interior (Ministerstvo Vnutrennikh Del,
or MVD) of the Russian Federation. The resolution rate of major criminal of-
fenses (SOLVE) reflects the efficiency of the agency in solving registered crimes.
Yet it is conceivable that the resolution rate is high because the share of crimes
that are registered is low. The resources available to law enforcement, normal-
ized by population, serve as an additional proxy for the ability of the agency to
fight crime. We use data on budgetary expenditures on law enforcement and se-
curity per capita (ENFORCE). Last, we use the number of employees in the fed-
eral courts per 10,000 population (JUDGE).17 Judicial employment is a proxy for
effective prosecution in court and does not directly relate to our main dependent
variable but to our alternative dependent variable, the number of convictions per
10,000 public officials. Nevertheless, a well-resourced judicial system may indi-
cate a higher probability of conviction once the crime is registered and thus may
create a significant deterrence effect.
Government size can be another determinant of corruption, as larger public
budgets, especially for public procurement of nonstandard equipment, will in-
crease opportunities for corruption (Shleifer and Vishny 1993). We use the loga-
rithm of per capita real budget expenditures, excluding expenditures for law en-
forcement, the judicial system, and the total wage bill of public officials (GOV
EXPEN), as a proxy for rents to be acquired through corrupt behavior (for in-
stance, misappropriation of funds in exchange for kickbacks).
Natural resource rents often create a corrupt environment (Leite and Weid-
mann 1999; Kronenberg 2004; Goldberg, Wibbels, and Mvukiyehe 2008; Vi-
cente 2010; Bhattacharyya and Hodler 2010; Van der Ploeg 2011). Firms in the
extractive industries operate in noncompetitive market environments with high
entry barriers and intensive regulations; as they are not footloose, they cannot es-
cape government extortion. Given the regulatory environment, the high resource
rents, and thus the high (potential) profits, bureaucrats and the firms’ executives
may face strong temptations to engage in corruption. Gaddy and Ickes (2005) and
Bradshaw (2006) suggest that corruption in Russia is particularly pronounced in
16
People may be more inclined to report corruption if they are convinced that the police will be
effective in building a case against the perpetrators.
17
The category of federal courts includes district courts, which deal with criminal offenses such
as corruption as a court of first instance, and arbitral courts, which act as courts of second instance
for criminal offenses. It does not include magistrates and constitutional courts, which are irrelevant
to our analysis.

the oil and gas sector; thus, resource-rich regions could be expected to have more
corruption. We use the lagged value of extracted oil and gas in constant prices in
a region divided by total population to capture the size of the natural resource
rents in the region (OIL & GAS).
We also control for the socioeconomic profile of the regions. We include aver-
age income, which has frequently been used in corruption studies and found to
be negatively correlated with corruption levels (for example, Meier and Holbrook
1992; Goel and Nelson 1998; Adsera, Boix, and Payne 2003; Glaeser and Saks
2006; Alt and Lassen 2014); our measure is the logarithm of income per capita
in constant rubles (INC). We also include income inequality measured by the
regional Gini coefficient (GINI), which has been found to be a strong determi-
nant of corruption (see Gyimah-Brempong [2002] for Africa, You and Khagram
[2005] for a cross-section of countries, Glaeser and Saks [2006] for the United
States, and Dong and Torgler [2013] for China). Education should be negatively
associated with corruption levels, as it empowers people to resist the demands of
corrupt officials (Knack, Kugler, and Manning 2003; Glaeser and Saks 2006; Alt
and Lassen 2014). We include the percentage of the economically active popula-
tion with college, university, or other higher education (EDU). Data on education
are composed on the basis of quarterly representative surveys by FSSS.18
The opportunity costs of corruption are measured by our variable of interest,
RESAL, the probability of detection (captured by the law enforcement variables
described above), and the ease of finding a different occupation once the pub-
lic official has been convicted and fired (Van Rijckeghem and Weder 2001). We
measure this third influence by the average number of months needed to find a
job for all unemployed individuals in the previous period (UNEMPTIME).19 Our
measure thus reflects the personal costs of being unemployed, which depend on
labor market conditions known to the public official at the time the incident is
reported.
Media freedom has been found in other contexts to curb corruption effectively
through monitoring, information transmission, and exposure of corrupt officials
(Brunetti and Weder 2003; Chowdhury 2004). While it is typically very challeng-
ing to find subnational data on press freedom in countries in which the media are
not free, either because there is no regional variation or because the government
18
Income per capita, education, and inequality may be affected by corruption as well, so these
variables may be endogenous. Gundlach and Paldam (2009) find that long-run causality runs from
high income to low corruption levels and not conversely. Still, we cannot exclude the possibility of
endogenous regressors, which would make their point estimates less reliable, especially in pooled
ordinary least squares (OLS) regressions. In fixed-effects regressions using annual data, this is much
less of an issue, as the time for feedback effects is comparatively short. As the estimates for our vari-
able of interest are quite similar in pooled OLS and fixed-effects regressions, and as the omission
of income per capita, inequality, and education from the regression model does not change the es-
timates of our variable of interest in any significant way, we believe that this is not a major issue in
our context. Except for Glaeser and Saks (2006), no other study using conviction rates instruments
for these variables.
19
Ideally we would like to include the unemployment rate for individuals with a comparable skill
set, but these data are unavailable.

disallows such analyses, we obtained data from the GDF, which conducted ex-
pert surveys across Russian regions in 2006, 2008, and 2010 on this topic.20 The
GDF classifies the freedom of the print media and the electronic media in ev-
ery region as completely free, relatively free, relatively not free, or not free. Since
there are no completely free regions and it is not possible to quantify the differ-
ences between the remaining three categories, we construct a dichotomous vari-
able that equals one if the media are relatively free, and zero otherwise, for the
years available (FREE PRESS). These surveys were discontinued by GDF, as they
stopped accepting foreign funding in order to avoid being classified as a foreign-
sponsored NGO. The Russian parliament passed a law (Federal Law No. 121
[June 29, 2012]) that labeled Russia-based NGOs with foreign funding as foreign
agents (inostrannie agenti), obliged them to use stricter reporting standards and
undergo closer scrutiny, and made state intervention or interruption of the activ-
ities of these NGOs possible.21
In addition, we construct an extended variable measuring media freedom for
earlier years by utilizing data from the Carnegie Foundation index of democra-
tization of Russian regions, which was constructed as the average for the years
2000–2004 and includes a component measuring the independence of the media.
It ranges from 1 (unfree) to 5 (free).22 For our binary variable of media freedom,
we assign the value one to the regions that scored in the top two categories (4 or
5) in the Carnegie Foundation index. Because FREE PRESS is based on incom-
plete data, we investigate its effect on corruption in a separate set of regressions
that cover the period for which data on press freedom are available (see Section
3.2).
We control for the existence of regional anticorruption laws. In 2009 a fed-
eral anticorruption law was introduced; it established legislative principles and
instruments for fighting corruption, such as reviewing legislation for its poten-
tial to create entry points for corruption, creating awareness of and intolerance
for corruption (for example, via advertising campaigns), and strengthening re-
quirements for candidates for official positions.23 As the implementation of these
measures at the regional level required the introduction of similar regional laws,
such laws were subsequently established across the regions at different points in
time. Some regions had already introduced anticorruption laws before the federal
initiative. We control for anticorruption legislation that may significantly im-
prove the conditions for detecting and prosecuting illegal actions by including a
dummy variable ANTICORR LAW, which equals one if a region has an anticor-
ruption law (for at least half a year).
20
For data and descriptions, see Glasnost Defense Foundation, Monitoring: Glasnost Maps
(http://www.gdf.ru/map) (in Russian).
21
Federal Law No. 121 de facto forced many Russian nongovernmental organizations (NGOs) to
decline foreign funding to avoid being classified as foreign agents by Russian authorities. The law
was generally seen as a measure against politically active NGOs and activists who criticized the Rus-
sian government; see, for example, BBC (2012).
22
For data and description, see Independent Institute for Social Policy, Social Atlas of Russian Re-
gions: Integrated Indexes (http://atlas.socpol.ru/indexes/index_democr.shtml) (in Russian).
23
Most regional laws provide guidelines for establishing anticorruption commissions as well.

We include a measure of urbanization (URBAN) because urban areas may fa-

cilitate criminal activities in general and corruption in particular, as suggested
by Glaeser and Sacerdote (1999). The variable URBAN is defined as the share
of the population living in urban areas; an area qualifies as urban if it is a settle-
ment with at least 12,000 residents and 85 percent of the working population is
employed in nonagricultural sectors. However, Becker, Mendelsohn, and Bend-
erskaya (2012, pp. 19–20) warn that these criteria for urban areas in Russia are
often applied arbitrarily and might even be politically determined. Therefore, we
also control for infrastructure provision (which is better in urban areas) by in-
cluding landline telephone density (TEL) in the region.
As standard controls we also include the log of population (POP) to capture
scale effects and year fixed effects, which may capture common time trends such
as changing priorities in law enforcement. The data are summarized in Table 1.
3. Results
3.1. Fixed-Effects Estimation
We estimate OLS regressions with robust standard errors clustered at the re-
gional level, including a full set of region and time fixed effects. The dependent
variable is the number of bribery incidents registered by the police per 10,000
public officials. Results are reported in Table 2.24
The most parsimonious specification, model 1, shows a strong negative effect
of RELSAL, which suggests that a high relative salary for public officials reduces
corruption significantly and strongly. This result corroborates the conventional
wisdom. The inclusion of a nonlinear term for relative-salary levels in the par-
simonious model increases in absolute value the negative linear effect of relative
salaries on corruption, whereas the squared term is strongly positive and signif-
icant, which indicates that corruption declines significantly with an increasing
relative salary for public officials, but at diminishing rates (model 2).
Our favorite specification is model 3, with the full set of control variables; re-
sults for all variables in the more parsimonious model 2 are unaffected by the in-
clusion of the control variables. The relative-salary level of public officials exerts
a strong and highly significant negative effect on the level of corruption, which
again is sublinear. For the quadratic specification of RELSAL (RELSALSQ), we
calculate the turning point beyond which corruption increases again, which is
a relative-salary level of 1.76. This is still within the sample range, as 6 percent
of all observations are to the right of this turning point. Taken at face value, this
would indicate that at very high relative-salary levels, a further increase in the
salary levels of bureaucrats would actually increase corruption levels, which is
consistent with the idea of Besley and McLaren (1993). Yet there may be too few
observations to conclude that the nexus of corruption and relative salary is non-
24
We also estimated pooled OLS specifications with the same set of explanatory variables and, in
one specification, with dummies for seven of the eight federal administrative districts. Results are
remarkably similar to the fixed-effects specifications; they are available on request.

Table 1
Variable Descriptions and Summary Statistics
Description Mean SD
CORR Registered incidents of bribe acceptance, normalized by 10,000 public officials in civil service 44.59 29.06
CONVICTION—ALL Persons convicted for bribe acceptance, normalized by 10,000 public officials in civil service 14.67 7.74
150
CONVICTION—MAJOR Persons convicted for major crimes of bribe acceptance, normalized by 10,000 public officials in civil
service 13.71 7.23
RELSAL Ratio of average monthly salary of public officials to per capita monthly salary in business counseling,
lagged by 1 year 1.03 .40
SOLVE Annual resolution rate (%) for the major and most serious criminal offenses (crimes penalized with
imprisonment for 5 years or more) 58.85 10.97
ENFORCE Logarithm of per capita budgetary expenditures for law enforcement and public security, in 1,000s of
constant rubles 6.24 .72
JUDGE Average number of employees in federal courts per 10,000 residents, lagged by 1 year 10.96 6.34
GOV EXPEN Logarithm of per capita total expenditures by state and local governments (excluding law enforcement,
the judicial system, and expenditures for public administration including officials’ salaries), in 1,000s
of constant rubles 9.80 .55
OIL & GAS Amount of crude oil and natural gas extracted (in tons and million cubic meters, respectively) in the
region multiplied by average national price (per unit), in 1,000s of rubles per capita, lagged by 1 year 11.82 57.30
INC Logarithm of average monthly per capita income, in constant rubles 8.83 .42
GINI Gini coefficient (gross income) estimated for December of the previous year .38 .03

EDU Economically active inhabitants with tertiary education (%) 69.33 7.22
POP Logarithm of population (in 1,000s), as of January 1 of the current year 7.13 .90
URBAN Urbanization measured as the ratio of urban population to total population by the start of
the year (%) 69.35 12.64
TEL Landline telephones per 100 inhabitants, estimated for the end of the past year 21.53 5.50
UNEMPTIME Average time needed to find a job, lagged by 1 year 8.21 1.46
ANTICORR LAW Dummy that equals one if regional anticorruption law exists, zero otherwise (dummy equals one in year
of adoption if law was introduced in the first 6 months .51 .50
RELSAL_WC Alternative relative salary of public officials: ratio of nominal average monthly salary of public officials in
civil service to average salary of white-collar employees in manufacturing (weighted for composition
of ranks) 1.16 .29
CRIME − CORR Registered crimes in region excluding registered incidents of corruption, per 10,000 officials in civil
service 19,774.99 8,599.98
MURDERS Registered murders and attempted murders per 10,000 officials in civil service 155.63 99.54
DRUGS Registered drug-related crimes per 10,000 officials in civil service 1,381.43 653.89
THEFTS Registered thefts per 10,000 officials in civil service 8,614.98 4,453.42
Note. Bribe acceptance is defined as in Russian Criminal Code, art. 290.
151
Table 2
Fixed-Effects Estimates of Registered Corruption Incidents
per 10,000 Public Officials
(1) (2) (3)

RELSAL −8.818* −35.41** −35.03**
(−2.27) (−3.49) (−3.53)
RELSALSQ 10.09** 9.928**
(3.00) (2.98)
SOLVE .444* .510** .571**
(2.59) (3.04) (3.46)
ENFORCE −4.86 −5.51 −4.679
(−.98) (−1.10) (−1.03)
JUDGE .54 .57 .852
(.65) (.71) (.93)
TEL .477
(.41)
URBAN −.58
(−.42)
OIL & GAS −.0129
(−.95)
GOV EXPEN −7.924
(−.79)
INC 4.028
(.32)
EDU −.769**
(−3.18)
GINI 14.61
(.18)
POP 93.02+
(1.92)
UNEMPTIME −2.251**
(−3.19)
ANTICORR LAW 10.84*
(2.33)
R2 .06 .07 .121
AIC 6,916.6 6,905.2 6,883.3
BIC 6,977.3 6,970.6 6,995.5
Note. Values in parentheses are t-statistics. Robust standard errors are clus-
tered at the regional level. Region and year fixed effects are included in all
models. AIC = Akaike information criterion; BIC = Bayesian information
criterion. N = 790.
+ p < .10.
* p < .05.

** p < .01.
monotonic.25 What is clear, however, is that rising relative salaries of bureaucrats

have strongly diminishing returns in terms of reduced corruption levels. In all
specifications the nonlinear term is highly significant, and specifications includ-
ing such a term consistently outperform specifications with a linear term only, as
25
We are grateful to the editor for pointing this out.

evaluated by the Akaike information criterion (AIC), the Bayesian information

criterion (BIC), or the adjusted R2 statistic.
The effectiveness of law enforcement is measured by three variables: the an-
nual resolution rate of serious criminal offenses by the police, the resources for
law enforcement as measured by per capita expenditures for law enforcement,
and the number of judicial staff and attorneys per 10,000 people. The resolution
rate (SOLVE) is a very strong predictor of registered corruption: a 1-standard-
deviation increase in the resolution rate (that is, an increase of 11 percentage
points) increases registered corruption cases by one-fifth of a standard deviation
(six cases per 10,000 public officials). The resolution rate measures the efficiency
of law enforcement; it may thus proxy for the ability to detect clandestine illegal
activities such as corruption. At the same time, the incentive to report corrup-
tion may increase with a higher resolution rate. The resources available to law en-
forcement authorities (ENFORCE) may proxy for the ability of law enforcement
agencies to launch effective investigations; they may be most visible to the public
and the potential bribe takers and as such may exert a deterrence effect. Indeed,
the estimate for ENFORCE is negative, but it does not reach usual significance
levels. The number of judicial personnel (JUDGE) is not significant in the models
with standard controls.
Changes in urbanization and infrastructure levels do not affect the number
of corruption incidents in the fixed-effects regression, possibly because such
changes occur slowly from year to year. Coefficients for income, inequality, and
government expenditures are insignificant as well. Increased oil and gas produc-
tion does not affect corruption, probably because most rents do not accrue to
the regions but are transferred to Moscow.26 The number of corruption incidents
decreases significantly with increasing education levels in the population, as mea-
sured by the share of the economically active population with tertiary education.
This may indicate that people with more education may be more likely to resist
demands for bribes but also that better-educated people may hold their bureau-
crats more accountable. This result is in line with the literature (Knack, Kugler,
and Manning 2003; Glaeser and Saks 2006; Alt and Lassen 2014). An increase in
population increases corruption; this may be a simple scale effect, as more inhab-
itants imply more potential bribers, and more populous regions may also have
more complicated bureaucratic hierarchies, which may be prone to more cor-
ruption. The introduction of a regional anticorruption law significantly increases
reported corruption incidents. These laws raise social awareness and provide
additional opportunities for reporting corruption (for instance, through the es-
tablishment of anticorruption commissions), but they may not necessarily deter
26
Bradshaw (2006) argues that profits are transferred to the company headquarters, which are lo-
cated mostly in Moscow and, for Gazprom, in St. Petersburg; taxes accrue to the center and are only
partially and nontransparently redistributed to the resource-rich regions. Part of the rents may be
retained by the regions through inefficient and costly regional inputs, and others may take the form
of corruption; yet since the licensing procedures are likewise nontransparent and involve many gov-
ernment bodies, the regional incidence of resource-related corruption remains unclear (Gaddy and
Ickes 2005; Bradshaw 2006).

corruption, as argued by Batory (2012)—the target group of the laws may not be
willing to comply, especially if the law receives little support from society. Our
finding is in line with Goel and Nelson (2014), who find awareness of the whistle-
blowers’ law in the United States to be positively correlated with conviction rates
for corruption.
An increase in the average unemployment time significantly reduces corrup-
tion. Other things equal, a deteriorating labor market increases the costs of cor-
ruption and thus deters bureaucrats from engaging in corrupt activities.27 This
mirrors our central result for the relative salary of bureaucrats: increased oppor-
tunity costs of corruption reduce corruption at the margin. These results are in
the spirit of the literature on crime and punishment as pioneered by Gary Becker
and George Stigler (Becker 1968; Stigler 1970; Becker and Stigler 1974).
3.2. Freedom of Press

In this section, we present the results for the effects of—partial—press freedom
on corruption in Russia using data generated by GDF. These data are available
only for the years 2006, 2008, and 2010 (see Section 2.3). To deal with this data
issue, we follow different approaches. Table 3 presents the results. Regression (1)
shows fixed-effects estimates for the years for which GDF data are available; re-
gression (2) includes data from the Carnegie Foundation for the year 2004. In
regression (3), we linearly interpolate by averaging the data for press freedom for
the missing years 2005, 2007, and 2009 using the data in regression (2). Finally,
regression (4) extends the data set to 2013 by using the data for 2010 for the sub-
sequent years, as media freedom has been stable since 2010.28 All regressions in-
clude the control variables as in our baseline specification (Table 2, model 3); for
brevity we report only the variables of interest.
All specifications provide similar pictures. First, even relative press freedom
curtails corruption significantly and substantially. This corroborates earlier find-
ings made in cross-country analyses (Brunetti and Weder 2003; Chowdhury
2004; Freille, Haque, and Kneller 2007) and evidence from a case study (Reinikka
and Svensson 2005), in a novel context. We are able to show that even in a semi-
authoritarian regime like Russia, there are differences in the degree of (relative)
press freedom across regions, and these differences affect regional corruption lev-
els significantly. All estimates are significantly positive and of similar magnitude.
Second, our result for the effect of relative salaries for public officials on the cor-
27
The expected costs of corruption are the probability of detection and punishment, captured by
the law enforcement variables described above, multiplied by the punishment according to the crim-
inal code, which is equal across regions; a potential wage discount in the private sector, as measured
by our variable of interest, RELSAL; and the costs of finding alternative employment after being
removed from office.
28
Freedom House ranked media freedom in Russia consistently at 80–81 points (out of 100, with
100 indicating absolutely no media freedom) for the period 2010–13, whereas it reported deteriorat-
ing overall scores for press freedom in the preceding years. See Freedom House, Russia: Freedom of
the Press 2010 (https://freedomhouse.org/report/freedom-press/2010/russia), with links to the re-
ports for preceding and following years.

Table 3
The Effect of Freedom of the Press on Incidents of Corruption
2004, 2006, Interpolation, Extrapolation,

2006, 2008, 2010 2008, 2010 2004–10 2004–13
(1) (2) (3) (4)
FREE PRESS −8.776* −8.470* −6.921* −7.611*
(−2.00) (−2.20) (−2.05) (−2.20)
RELSAL −54.96** −42.09* −22.05+ −35.67**
(−2.91) (−2.64) (−1.90) (−3.56)
RELSALSQ 19.08** 15.21** 7.262+ 10.27**
−8.776* −8.470* −6.921* −7.611*
N 234 312 546 780
R2 .164 .165 .143 .13
AIC 1,966.1 2,645.8 4,559.2 6,800.9
BIC 2,028.3 2,717 4,653.8 6,917.4
Note. Values in parentheses are t-statistics. Robust standard errors are clustered at the regional
level. Control variables not shown but included in all models are SOLVE, ENFORCE, JUDGE, TEL,
URBAN, OIL & GAS, GOV EXPEN, INC, EDU, GINI, POP, UNEMPTIME, ANTICORR LAW, and
time and region fixed effects. AIC = Akaike information criterion; BIC = Bayesian information cri-
terion.
+ p < .10.
* p < .05.

** p < .01.
ruption level remains unaffected by the inclusion of the variable for media free-
dom. Other results are likewise largely unaffected by the inclusion of the media
variable and are available on request.
4. Experiences of Corruption

We consider law enforcement data to be the best measure of corruption. Yet
if the legal system is systematically biased (especially if this bias is regionally dif-
ferent), convictions for corruption and, to a lesser extent, registered incidents of
corruption will give a biased picture. In that case, the population’s experiences of
corruption will be a better measure. To analyze whether data on such experiences
portray a different picture, we analyze the available survey data on experiences of
corruption on a regional level. As there are only two surveys (2002 and 2010), we
employ a difference-in-differences approach and relate the change in corruption
to the changes in relative salaries and the control variables.
In 2002, TI and the Information for Democracy Foundation (INDEM) sur-
veyed 5,666 citizens and 1,838 representatives of small and medium enterprises
in 40 Russian regions.29 These regions are home to 73 percent of the population
and generally representative of the Russian Federation; however, they exclude the
regions with populations of predominantly non-Russian ethnicity in the North
Caucasus (Chechnya, Dagestan, and Ingushetia). The survey asked about per-
29
For the data, see Information for Democracy Foundation, Regional Indexes of Corruption
(http://transparency.org.ru/vse-zavershennye/indeksy-korruptcii-v-rossiiskikh-regionakh) (in Rus-
sian).

ceptions and experiences of corruption. As we are skeptical about the accuracy

of perceptions of corruption (see Section 2.1), we use only the results for expe-
riences of everyday corruption.30 The survey calculates the amount of everyday
corruption payments as a share of regional GDP, which is used as the measure of
corruption in the region.
The second survey was conducted in 2010 by the Ministry of Economic De-
velopment of the Russian Federation and the Public Opinion Foundation by or-
der of the president of the Russian Federation (Order No. 670 [March 14, 2010])
(Russian Federation 2011). It utilized the same methodology as the 2002 TI and
INDEM survey and covered 70 regions. This allows us to analyze the dynamics of
everyday petty corruption in the 40 regions included in both surveys. We use the
following protocol: First, the 2002 value of petty corruption in a region as a share
of regional GDP is subtracted from the 2010 value. Second, this regional differ-
ence is subtracted from the difference for the whole country during this period.
The changes in everyday corruption (ΔCORR_EXP) are subsequently regressed
on the changes in relative salaries and relative salaries squared and on a set of
controls.31 This approach allows us to address the issue of omitted-variable bias
stemming from unobserved—time-invariant—heterogeneity to obtain robust re-
sults. Descriptions of the data and descriptive statistics are given in Appendix B.
Table 4 provides the results. Model 1 contains the baseline regression for the
full set of 40 regions. We include a dummy for republics, as the four regions in
our sample with the status of an independent republic have a different political
situation—they are strongly authoritarian, have a larger non-Russian population,
support the ruling party more strongly, and enjoy more independence than the
other regions.32 We expect the self-reported measure of experienced corruption
to be biased in republics, as the population will be afraid of stating any corruption
experiences. This concern is expressed by Dininio and Orttung (2005, p. 518),
who analyzed corruption in the same 40 regions in 2002, and it may affect our
analysis of the change in corruption over time as these republics have become
even more authoritarian. Instead of including the dummy REPUBLIC, Dininio
and Orttung (2005) exclude the republics of Baskortostan and Tatarstan as the
main potential outliers from their regression model; we do the same in model 4.
In model 5, we also omit the region Primorskii Krai, as suggested by Dininio and
Orttung (2005), as it is infamous for widespread organized crime.
Model 2 includes the variable ΔFREE PRESS, which captures the change in
press freedom from unfree to relatively free by taking the value of 1 or from rel-
atively free to unfree by taking the value of −1 (and 0 otherwise). For 2002, we
use the regional data of the Carnegie Foundation, and for 2010, we use the GDF
report from 2010 in the same way as it is done for the interpolation of FREE
PRESS in Table 3, columns 3 and 4. The variable ΔFREE PRESS measures only
30
The 2002 survey also asked businessmen for their experiences of corruption, but since the 2010
survey did not, we focus on petty corruption only.
31
Controls are not exactly the same as in the previous sections, as not all data are available for
2002.
32
The republics in our sample are Bashkortostan, Tatarstan, Udmurtskaya, and Karelia.

Table 4
Determinants of Corruption Regressed on Measured Experiences of Corruption
(1) (2) (3) (4) (5)

ΔRELSAL −2.156+ −2.326+ −2.439* −2.639* −2.704*
(−1.95) (−2.05) (−2.37) (−2.35) (−2.35)
ΔRELSALSQ .815+ .874+ .992* 1.059* 1.090*
(1.93) (1.98) (2.41) (2.42) (2.42)
ΔFREE PRESS −.19
(−1.43)
ΔLASTING FREE PRESS −.0604* −.0622* −.0642*
(−2.43) (−2.40) (−2.54)
N 40 40 40 38 37
R2 .39 .42 .49 .49 .48
AIC 63 62.99 58.44 51.79 51.65
Note. Values are the results of ordinary least squares regressions of first diffferences with robust
standard errors; t-statistics are in parentheses. Model 4 excludes the republics of Baskortostan and
Tatarstan, and model 5 also excludes Primorskii Krai. Control variables not shown but included in all
models are ΔENFORCE, ΔTEL, ΔURBAN, ΔOIL & GAS, ΔGOV EXPEN, ΔINC, ΔEDU, ΔGINI,
ΔPOP, and ΔUNEMPTIME. The dummy variable REPUBLIC is included in models 1–3. AIC =
Akaike information criterion.
+ p < .10.
* p < .05.
the difference in status between 2002 and 2010 but not when the change took
place. Since the effect of a change in press freedom on corruption dynamics may
depend on the duration for which a region experienced improving or deteriorat-
ing press freedom, we use a second variable, ΔLASTING FREE PRESS, which
measures the number of years in our 9-year period in which the press was rela-
tively free. Models 3–5 use this variable instead of ΔFREE PRESS.
The results are in line with our previous findings. We find that experiences of
petty corruption also decrease with relative salaries of public officials, and the
effect is strongly diminishing. The calculated turning point has the same order
of magnitude as before. Longer unemployment spells reduce corruption. While
ΔFREE PRESS does not reach usual levels of significance, because of the reasons
outlined above and possibly because of the small sample size, our alternative vari-
able ΔLASTING FREE PRESS is significantly negative in all models, which in-
dicates that even an only relatively free press may reduce the extent of (petty)
corruption. The small number of observations may make these results illustrative
and not entirely convincing by themselves, yet they corroborate our previous re-
sults with a different measure of corruption and thus reinforce our previous find-
ings.
5. Robustness Checks

5.1. Conviction Rates as Endogenous Variable
We performed a number of robustness checks, the most important of which
are reported below. The literature using law enforcement data almost exclusively

relies on conviction rates.33 We argued in Section 2.1 that incidents of corruption

are a better measure than convictions for corruption for a number of reasons, at
least in the Russian context. In this section we examine whether the two mea-
sures of corruption are in accordance. We estimate our preferred specification,
model 3 in Table 2, for two conviction rates as alternative endogenous variables.
The term CONVICTION—ALL measures all convictions for bribery regardless
of the severity of the offense, while CONVICTION—MAJOR measures the rate
of conviction for crimes of corruption punishable by 5 years or more of impris-
onment.34 Results of the fixed-effects regression with robust standard errors clus-
tered at the regional level are reported in Table 5. For comparison, we repeat our
preferred model for incidents of corruption in column 1.
For our variable of interest the same picture emerges. Relative salaries have a
significant negative effect on corruption; this effect is again nonlinear, with the
calculated turning point at somewhat lower relative-salary levels (about 1.34 for
all convictions and 1.20 for major convictions). The control variables display
roughly similar features, although the significance levels differ; detailed results
are available on request.
5.2. Alternative Salary Concepts

To test how robust our results are with respect to our relative-salary measure,
we employ two alternative concepts for the wage to which public officials might
compare their salaries, one of which has been used in the literature. We argued in
Section 2.2 that most of the reference salaries used in the literature are too broad
and do not reflect the specific skill set of public officials in executive or legislative
functions.35 We therefore use salaries in business counseling as the reference, as
the skills required for this occupation come closest to those of public officials.
In this section, we investigate whether our results are driven by this particular
choice of reference category.
As an alternative reference salary, we use the salary of white-collar work-
ers since their job responsibilities and their education are broadly comparable
to those of public officials. For the same reasons of data availability as in Van
Rijckeghem and Weder (2001), we use data from the manufacturing sector,
which is substantial in all regions. Since the civil service has different hierarchy
levels (ranks) and the composition of these ranks differs across regions, we con-
struct a reference white-collar salary for each region reflecting its specific com-
position. We match hierarchy levels in civil service with the corresponding lev-
33
Conviction rates are used by Goel and Rich (1989), Goel and Nelson (1998), Glaeser and Saks
(2006), Karahan, Razzolini, and Shughart (2006), and Alt and Lassen (2014) for the United States
and by Di Tella and Schargrodsky (2003) for Argentina; exceptions are Del Monte and Papagni
(2007) and Dong and Torgler (2013), who use corruption incidents reported to the police for Italy
and China, respectively.
34
We obtained data on all convictions for 2006–12 and on major convictions for 2004–12.
35
Goel and Nelson (1998) and Karahan, Razzolini, and Shughart (2006) use per capita income,
Dong and Torgler (2013) use average salary in the economy, and Van Rijckeghem and Weder (2001)
focus on the average salary in the manufacturing sector for the reason of comparability across coun-
tries. Goel and Rich (1989) use middle-grade accountants’ salaries as the reference.

Table 5
Conviction Rates as Measure of Corruption
CORR CONVICTION—ALL CONVICTION—MAJOR

(1) (2) (3)
RELSAL −35.03** −3.529+ −3.495+
(−3.53) (−1.72) (−1.85)
RELSALSQ 9.928** 1.319* 1.463*
(2.98) (2.06) (2.29)
N 790 553 711
R2 .121 .108 .097
AIC 6,883.3 3,227.6 4,106.3
BIC 6,995.5 3,318.3 4,211.3
Note. Values are the results of fixed-effects regressions with robust standard errors clustered at the
regional level; t-statistics are in parentheses. Control variables not shown but included in all models
are SOLVE, ENFORCE, JUDGE, TEL, URBAN, OIL & GAS, GOV EXPEN, INC, EDU, GINI, POP,
UNEMPTIME, ANTICORR LAW, and time and region fixed effects. AIC = Akaike information cri-
terion; BIC = Bayesian information criterion.
+ p < .10.
* p < .05.

** p < .01.
els of white-collar jobs in manufacturing and calculate the reference salary as a

weighted average using the white-collar manufacturing wages for each level and
the share of civil servants at the corresponding level in the civil service of that re-
gion. Details of the measure’s construction are provided in Appendix A. As a sec-
ond alternative measure, we use the average salary in the economy to investigate
whether a broader measure would reveal similar corruption dynamics.
Table 6 shows our results. Regression (1) is our baseline model, with business
counseling as the reference salary, and regression (2) presents the results for the
alternative reference salary of white-collar workers in manufacturing. We find a
very similar nonlinear relationship for this new measure of relative salaries. Re-
gression (3) reports estimates for the average salary in the region as the reference
salary. The results are no longer significant for this broader concept of relative
salary, but they still exhibit the same pattern, which is not surprising given that
the reference category is quite imprecise.
Overall, the results show that our findings are not limited to the relative-salary
concept that we use. Our results are more pronounced if we use a reference salary
that requires a comparable skill set.
5.3. Placebo Test

In this section, we investigate whether a low relative salary is indicative of a
crime-ridden environment in general or a situation that is specifically condu-
cive to corruption. If relative salaries are negatively correlated with crime levels
in general, our results would not explain the occurrence of corruption as such,
but corruption as an endogenous variable would only be indicative of a crime-
intensive overall environment. Such a situation could occur, for instance, if low

Table 6
Alternative Relative-Salary Concepts
Business Average White-Collar Regional Average

Counseling Salary Salary
(1) (2) (3)
RELSAL −35.03** −70.38* −91.97
(−3.53) (−2.42) (−1.04)
RELSALSQ 9.928** 13.46* 28.88
(2.98) (2.28) (1.04)
N 790 632 790
R2 .121 .106 .094
AIC 6,883.3 5,510.4 6,907.2
BIC 6,995.5 5,608.3 7,019.3
Note. Values are the results of fixed-effects regressions with robust standard errors clustered at
the regional level; t-statistics are in parentheses. Control variables not shown but included in all
models are SOLVE, ENFORCE, JUDGE, TEL, URBAN, OIL & GAS, GOV EXPEN, INC, EDU,
GINI, POP, UNEMPTIME, ANTICORR LAW, and time and region fixed effects. AIC = Akaike
information criterion; BIC = Bayesian information criterion.
* p < .05.
** p < .01.
relative salaries—including those of the law enforcement community—erode the

motivation and zeal of the police force to fight crime.
To test for such a possibility, we estimate our baseline specification with differ-
ent endogenous variables capturing important aspects of the overall crime envi-
ronment. We use statistics for four types of crimes not related to corruption: the
number of all crimes excluding incidents of corruption (CRIME − CORR), the
number of murders and attempted murder (MURDERS), the number of drug-
related crimes (DRUGS), and the number of registered thefts (THEFTS), all per
10,000 public officials. The results are reported in Table 7.
All crime variables are uncorrelated with relative-salary levels, except for cor-
ruption. Moreover, changes in the time needed to find a job if unemployed and
the introduction of anticorruption laws affect the level of corruption but not of
any other crime.36 Thus, we can exclude the possibility that our previous results
are only indicative of a crime-intensive environment and conclude that low rel-
ative salaries for public officials are conducive to corruption in the public sector.
5.4. Additional Robustness Checks

We analyze whether ethnic heterogeneity has affected corruption levels in Rus-
sia. Ethnic fragmentation has been shown to negatively affect economic policy,
increase favoritism, and reduce economic growth (Easterly and Levine 1997; Ale-
sina et al. 2003; Alesina and La Ferrara 2005; Franck and Rainer 2012). Olken
(2006) finds for Indonesia that corruption is greater in ethnically divided villages.
This corroborates earlier findings of cross-country studies based on perceptions
of corruption (Mauro 1995; La Porta et al. 1999). We use the index of ethnic frag-
36
We find similar results for pooled OLS regressions, which are available on request.

Table 7
Correlation of Salaries and Various Types of Crime
CRIME −
CORR CORR MURDERS DRUGS THEFTS
(1) (2) (3) (4) (5)
RELSAL −35.03** −2,169.5 11.38 −9.336 −847.9
(−3.53) (−1.52) (.43) (−.07) (−1.16)
RELSALSQ 9.928** 615.9 −3.587 −19.84 174.9
(2.98) (1.37) (−.43) (−.46) (.74)
UNEMPTIME −2.251** 32.96 −3.895 27.59 48.46
(−3.19) (−.17) (−1.63) (1.52) (.50)
ANTICORR LAW 10.84* −118 −.318 −23.37 −82.36
(2.33) (−.20) (−.06) (−.47) (−.27)
R2 .121 .727 .7 .256 .719
AIC 6,883.3 14,711.1 8,034.3 10,947 13,707.7
BIC 6,995.5 14,823.3 8,146.4 11,059.1 13,819.8
Note. Values are the results of fixed-effects regressions with standard errors clustered at the re-
gional level; t-statistics are in parentheses. Control variables not shown but included in all models
are SOLVE, ENFORCE, JUDGE, TEL, URBAN, OIL & GAS, GOV EXPEN, INC, EDU, GINI, POP,
and time and region fixed effects. AIC = Akaike information criterion; BIC = Bayesian information
criterion. N = 790.
+ p < .10.
* p < .05.

** p < .01.
mentation and the index of ethnic polarization in a region to study the effect of
ethnic heterogeneity. To construct both indices, we follow the methodology of
Montalvo and Reynol-Querol (2005) and use the data from population censuses
in 2002 and 2010 (we interpolate the values for years in between).37 These vari-
ables have very little variation over time and thus should be captured by fixed
effects, yet we still estimate a pooled OLS and a between-effects panel model. In
none of the specifications do the variables reach usual significance levels.
In one specification, we exclude the Caucasian regions from our preferred
model, as corruption levels and institutional quality may arguably be very differ-
ent there (Dobler 2011). In other specifications, we exclude regions with the sta-
tus of a republic or insert a dummy controlling for them. In all cases, the results
do not significantly change. We also use Cook’s distance Di (Cook 1977) to iden-
tify potential outliers and exclude all observations with a distance larger than 4/n,
with n denoting the number of observations. We identify 39 outliers out of 790
observations for which Di > .005. Excluding them does not change the results in
any significant way. (Results are available on request.)
Another concern may be that if police and bureaucrats’ salaries are highly cor-
related, our variable of interest, RELSAL, may capture police efficiency rather
than the incentive of public officials to engage in corruption.38 This would be the
37
Census data can be accessed at the official Russian census database (http://std.gmcrosstata.ru
/webapi/jsf/tableView/customiseTable.xhtml).
38
We are grateful to the editor for raising this point.

case if higher police salaries attract more able personnel or enhance the loyalty
and determination of the existing police force. To investigate such a possibility,
we include police salary and police salary squared, normalized as in our variable
of interest in our preferred specification (Table 2, model 3). Police salary has no
significant influence on incidents of corruption, and our variable of interest ex-
erts the same influence as before. That makes us confident that we can exclude
the possibility that our results are driven by police efficiency.
6. Concluding Remarks

The main finding of this paper is a strong causal nonlinear relationship be-
tween the relative salary of public officials and the number of incidents of cor-
ruption registered by the police or resulting in conviction by the courts. Increases
in salary reduce corruption significantly, but with strongly diminishing returns.
We are able to show that this relationship is very robust with respect to the cor-
ruption measure used—incidents, convictions, or experiences of bribery—and to
the relative-salary measure used. Essentially, we prove an opportunity cost argu-
ment in the spirit of Becker and Stigler with regard to the relative salary of public
officials; this is corroborated by the finding that unfavorable labor market condi-
tions, as measured by the average time needed to find a new job, also significantly
reduce corruption. The duration of unemployment codetermines the opportu-
nity costs of being corrupt.
In addition to our focus on the Russian Federation, our findings are novel in
three dimensions. First, we are able to show in a fixed-effects setting that rela-
tive salaries of public officials matter for corruption levels. Previous cross-coun-
try studies yielded inconclusive results once they controlled for unobserved het-
erogeneity through country fixed effects. A second novel result is that increasing
relative salaries of public officials may lose its effectiveness; it is highly efficient at
low and medium relative-salary levels but may be ineffective, or even counterpro-
ductive, at high and very high relative-salary levels. Third, we are the first to show
that in a country that restricts freedom of the media substantially and lacks dem-
ocratic accountability at the national level such as Russia—which ranks 148 out
of 180 in the World Press Freedom Index (Reporters without Borders 2014)—
variations in relative freedom of the press contribute significantly to explaining
regional differences in corruption levels. In other words, even partial freedom of
the media in a generally unfree environment leads to substantially lower corrup-
tion levels.
Our results have important implications for policy reforms. While increasing
public officials’ salaries may be an integral part of an anticorruption reform, it is
no silver bullet. Salary adjustments need to be carefully designed, with the proper
reference salary identified, to achieve the efficient level. Increasing salaries is
costly, and the gains in terms of reduced corruption may increasingly dwindle, if
not disappear. In contrast, granting more freedom to the press, even if only par-
tially, unambiguously reduces corruption.

Appendix A
Construction of the Relative-Salary Measures
The FSSS publishes the composition of the civil service’s executive branch by
rank for all Russian regions for the end of the years 2005 and 2011. The four
ranks are top administrators, advisers, specialists, and supporting specialists. As
data are available only for 2 years, we interpolate the composition of the ranks in
the public service for 2006–10 as a linear projection, assuming that the composi-
tion did not experience a dramatic shock in any region. We have no information
of such events.
The FSSS database provides data on average monthly salaries in the manufac-
turing sector for the following categories of employees: (a) executive managers
and head administrators, (b) high-level specialists, and (c) middle-level special-
ists (other categories are [d] employees with supportive functions: serving, keep-
ing records, and paperwork, [e] workers in housing sectors, trade, and similar
sectors, [f] qualified workers in construction, transport, mining, and manufac-
turing, [g] qualified workers in mechanics and machinery operators, and [h] un-
qualified workers). Data are available for 2005, 2007, 2009, and 2011; we interpo-
late for the missing years.39
The average salary of public officials in a region is calculated as the weighted
sum of the salaries of public officials in the executive branch (top administra-
tors, advisers, specialists, and supporting specialists) using regional employment
shares as weights.
The reference white-collar workers’ salary is calculated as the weighted sum
of incomes in the manufacturing sector of levels a–c above (top managers to
middle-level specialists), using the weights of the corresponding levels in the civil
service. Top administrators and advisers correspond to executive managers and
head administrators in the manufacturing sector, specialists in the civil service
correspond to high-level specialists in manufacturing, and supporting special-
ists in the civil service correspond to middle-level specialists in manufacturing.
Categories d–h in the manufacturing sector are not considered, as they are not
white-collar workers.40 This white-collar salary represents the average alternative
salary that a public official would receive in the manufacturing sector.
Figure A1 illustrates how we constructed the alternative salary for the Saratov
region for 2005. The numerator of the relative-salary measure is the same as in
our primary variable RELSAL, but the denominator is an alternative white-collar
salary. Matching shades illustrate the weighting of the alternative salary with re-
spect to the composition of the civil service.
39
Federal State Statistics Service, Unified Interagency Informational Statistical System, Average
Paid Salary of Employees in Organizations by Professional Groups (https://fedstat.ru/indicator
/33990) (in Russian).
40
The salary of head administrators and executive managers in the manufacturing sector is mul-
tiplied by the share of top administrators and advisers in the civil service, the salaries of high-level
specialists in manufacturing by the share of specialists in the civil service, and the salary of middle-
level specialists in manufacturing by the share of supporting specialists in the civil service. The
weighted salaries are then summed to form the reference white-collar salary in the region.

Figure A1. Construction of the alternative relative-salary measure (white-collar workers) for the Saratov region, 2005
164
Appendix B
Data for Experiences of Corruption
Table B1
Experiences of Corruption: Variable Descriptions and Summary Statistics
Description Mean SD
ΔCORR_EXP Change in % of petty corruption in regional GDP minus change in share of petty corruption in national
GDP for whole country, 2002–10 .012 .487
ΔRELSAL Change in the ratio of average monthly salary of public officials (including compensation and bonuses)
to per capita monthly salary (including compensation and bonuses) in the business counseling sector,
2002–9 −.312 .431
ΔENFORCE Change in logarithm of per capita budgetary expenditures for law enforcement and security, in 1,000s of
constant rubles, 2002–10 .885 .223
ΔGOV EXPEN Change in logarithm of per capita total expenditures by state and local governments (excluding law
enforcement and the judicial system), 2002–10, in 1,000s of constant rubles .667 .174
Change in total value of crude oil and natural gas extracted per capita, 2002–10, in 1,000s of constant rubles 6.168 22.691
165
ΔOIL & GAS
ΔINC Change in logarithm of average monthly real income per capita, in constant rubles, 2001–9 .906 .154
ΔGINI Change in income inequality, as measured by the Gini coefficient (gross income), 2001–9 .041 .027
ΔEDU Change in % of adult population (over age 15) with tertiary education, as reported by national censuses of
2002 and 2010 4.615 1.535
ΔPOP Change in population (in 1,000s), 2002–10 −.036 .050
ΔUNEMP Change in unemployment rate (%), constructed according to methodology of International Labour
Organization, 2001–9 −.365 1.644
ΔURBAN Difference in urbanization rate as reported by national censuses of 2002 and 2010 .001 .015
ΔTEL Change in the number of home landline telephones per 100 inhabitants, 2001–9 6.355 2.669
REPUBLIC Dummy that equals one if the region has republic status .1 .304
ΔFREE PRESS Equals 1 if the press became relatively free in previously not-free region, −1 if the press became not free in
previously relatively free region, and 0 otherwise .075 .572
ΔLASTING FREE PRESS Years for which the press in the region was relatively free, calculated as the sum of all observations for the
extended (with simple interpolations) variable FREE PRESS from the main data set 2.588 2.950

Note. GDP = gross domestic product.
Appendix C
Variables and Sources (in Russian)
ANTICORR LAW. ConsultantPlus (legal database) (http://www.consultant
.ru).
CONVICTION—ALL. Ministry of the Interior. Available from the authors
on request.
CONVICTION—MAJOR. Ministry of the Interior. Available from the au-
thors on request.
CORR. Available from the authors on request. For 2009–15: Ministry of the
Interior, Crime in the Region (http://crimestat.ru/regions_table_total).
ΔCORR_EXP. Ministry of Economic Development, The State of Domestic
Corruption in the Russian Federation (http://economy.gov.ru/minec/activity
/sections/anticorruptpolicy/doc20110614_027).
CRIME - CORR. Federal State Statistics Service, Regions of Russia: Socio-
economic Indicators (http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat
/ru/statistics/publications/catalog/doc_1138623506156).
DRUGS. Federal State Statistics Service, Regions of Russia: Socioeconomic In-
dicators (http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics
/publications/catalog/doc_1138623506156).
EDU, ΔEDU. Federal State Statistics Service, Regions of Russia: Socioeco-
nomic Indicators (http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru
/statistics/publications/catalog/doc_1138623506156).
ENFORCE, ΔENFORCE. Federal Treasury, The Consolidated Budgets of
the Subjects of the Russian Federation and of the Budgets of Territorial Govern-
ments’ Extrabudgetary Funds (http://www.roskazna.ru/ispolnenie-byudzhetov
/konsolidirovannye-byudzhety-subektov/).
FREE PRESS, ΔFREE PRESS. Glasnost Defense Foundation, Monitoring:
Glasnost Maps (http://www.gdf.ru/map/).
GINI, ΔGINI. Federal State Statistics Service, Unified Interagency Informa-
tional Statistical System, The Gini Coefficient (Income Concentration Index)
(https://fedstat.ru/indicator/31165).
GOV EXPEN, ΔGOV EXPEN. Federal Treasury, The Consolidated Budgets
of the Subjects of the Russian Federation and of the Budgets of Territorial Govern-
ments’ Extrabudgetary Funds (http://www.roskazna.ru/ispolnenie-byudzhetov
/konsolidirovannye-byudzhety-subektov/).
INC, ΔINC. Federal State Statistics Service, Unified Interagency Informa-
tional Statistical System, Monetary Income (Average per Capita) (https://fedstat
.ru/indicator/30992).
JUDGE. Federal State Statistics Service, Central Statistical Database (http://
cbsd.gks.ru/#).
ΔLASTING FREE PRESS. Glasnost Defense Foundation, Monitoring: Glas-
nost Maps (http://www.gdf.ru/map/).
MURDERS. Federal State Statistics Service, Regions of Russia: Socioeco-


OIL & GAS, ΔOIL & GAS. Federal State Statistics Service, Regions of Russia:
Socioeconomic Indicators (http://www.gks.ru/wps/wcm/connect/rosstat_main
/rosstat/ru/statistics/publications/catalog/doc_1138623506156).
POP, ΔPOP. Federal State Statistics Service, Unified Interagency Informa-
tional Statistical System, The Resident Population as of January 1 (https://fedstat
RELSAL, ΔRELSAL. Federal State Statistics Service, Unified Interagency In-
formational Statistical System, The Average Monthly Nominal Wage per Em-
ployee for the Full Range of Organizations (https://fedstat.ru/indicator/33433).
RELSAL_WC. Federal State Statistics Service, Unified Interagency Informa-
tional Statistical System, Average Paid Salary of Employees in Organizations by
Professional Groups (https://fedstat.ru/indicator/33990).
REPUBLIC. Russian Constiution, Chapter 3: The Federal Structure (http://
www.constitution.ru/10003000/10003000-5.htm).
SOLVE. Ministry of the Interior, State Crime (https://xn--b1aew.xn--p1ai
/folder/101762).
TEL, ΔTEL. Federal State Statistics Service, Regions of Russia: Socioeco-
THEFTS. Federal State Statistics Service, Regions of Russia: Socioeconomic In-
dicators (http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics
/publications/catalog/doc_1138623506156).
UNEMPTIME. Federal State Statistics Service, Regions of Russia: Socioeco-
ΔUNEMP. Federal State Statistics Service, Regions of Russia: Socioeco-
URBAN, ΔURBAN. Federal State Statistics Service, Unified Interagency Infor-
mational Statistical System, The Resident Population as of January 1 (https://fedstat
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Corruption in Russia

Günther G. Schulze University of Freiburg

[ Journal of Law and Economics, vol. 59 (February 2016)]

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of the Interior. We argue that—unlike in the United States—convictions may be

2. The Data

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2.1. Measuring Corruption

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Figure 1. Dynamics of corruption in Russia (percentage of the value in 2004)

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2.2. Relative Salary

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Figure 2. Distribution of incidents of corruption per region-year

revenues and as a consequence of a bureaucratic bargaining process rather than

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2.3. Other Determinants of Corruption

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We include a measure of urbanization (URBAN) because urban areas may fa-

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(1) (2) (3)

* p < .05.

monotonic.25 What is clear, however, is that rising relative salaries of bureaucrats

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evaluated by the Akaike information criterion (AIC), the Bayesian information

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3.2. Freedom of Press

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2004, 2006, Interpolation, Extrapolation,

* p < .05.

4. Experiences of Corruption

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ceptions and experiences of corruption. As we are skeptical about the accuracy

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(1) (2) (3) (4) (5)

* p < .05.

5. Robustness Checks

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relies on conviction rates.33 We argued in Section 2.1 that incidents of corruption

5.2. Alternative Salary Concepts

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CORR CONVICTION—ALL CONVICTION—MAJOR

* p < .05.

els of white-collar jobs in manufacturing and calculate the reference salary as a

5.3. Placebo Test

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Business Average White-Collar Regional Average

relative salaries—including those of the law enforcement community—erode the

5.4. Additional Robustness Checks

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* p < .05.

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6. Concluding Remarks

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Günther G. Schulze    University of Freiburg

* p < .05.

* p < .05.

* p < .05.

* p < .05.

* p < .05.