Electronic Thesis and Dissertation Repository

Degree

Doctor of Philosophy

Program

Economics

Supervisor

Professor Igor Livshits

Abstract

This thesis consists of three chapters on macroeconomics of development. The first chapter discusses the impact of educational corruption on economic development. Its main contribution lies in quantifying two channels of educational corruption: a direct channel, whereby incompetent workers affect production due to a misallocation of talent, and a dynamic indirect channel, which can be referred to as a teacher’s effect on the availability of competent agents for production. The results suggest that, for the countries with the highest levels of educational corruption, the losses in output per capita induced by the indirect channel are ten times as large as the ones induced by the direct channel. The removal of educational corruption would increase the output per capita of these countries by more than 20%.

The second chapter examines corruption as a social norm and allows civil society to play a role in the fight against it. The theory shows that a more engaged civil society leads to lower levels of corruption but has an ambiguous effect on social capital (captured by the notion of honesty). Wage policies are proven to be ineffective in the proposed economic environment. The analysis of survey data from African countries indicates that the predictions of the model find empirical support and that the causality goes from civic engagement to corruption.

The third chapter investigates the factors shaping inter-ethnic relations through the links between one’s trust in one’s own ethnic group (intra-ethnic trust) and one’s trust in other ethnic groups (inter-ethnic trust). Based on survey data from African countries, it is shown that, even though most individuals have similar levels of intra- and inter-ethnic trust, differences exist for a nonnegligible fraction of them. For each level of intra-ethnic trust, the analysis shows that characteristics at the individual, ethnic-group, and district levels, as well as sustained growth over long periods of time, are consistently associated with higher levels of inter-ethnic trust. A contrast between the procyclicality of inter-ethnic trust and the countercyclicality of intra-ethnic trust is also established.

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