CORRUPTION PERCEPTIONS IN RUSSIA: ECONOMIC OR SOCIAL ISSUE?

Transcription

1 Anastasa V. Rassadovskaa, Andrey V. Astov CORRUPTION PERCEPTIONS IN RUSSIA: ECONOMIC OR SOCIAL ISSUE? BASIC RESEARCH PROGRAM WORKING PAPERS SERIES: ECONOMICS WP BRP 57/EC/214 Ths Workng Paper s an output of a research project mplemented at the Natonal Research Unversty Hgher School of Economcs (HSE). Any opnons or clams contaned n ths Workng Paper do not necessarly reflect the vews of HSE.

2 Anastasa V. Rassadovskaa 1, Andrey V. Astov 2 CORRUPTION PERCEPTIONS IN RUSSIA: ECONOMIC OR SOCIAL ISSUE? 3 The effcency of socal reforms n dfferent countres mostly depends on the extent to whch they can be accepted by the populaton. However, even f problems are smlar, the reasons may dffer, whch can make t dffcult to apply exstng laws of one state to another. Brbery s a typcal problem for developng countres as shown n the Corrupton Percepton Index (calculated by Transparency Internatonal) and recent research (Levn and Satarov, 2) (Ilzetzk, 211). Corrupton can have roots n socalst regmes as n recently establshed poltcal stablty nstable economc stuaton may lead to growth n crme. The man challenge wthn the scope of ths project s to dentfy the relaton between corrupton percepton and levels of trust n socety and to dstngush the dfferences n factors affectng these characterstcs. The research reveals that dstrust matters a lot for the problem n Russa and suggests further examnaton of the dynamcs of trust between post Sovet countres and European countres. captal JEL Classfcaton: C35, D73, P37 Keywords: corrupton perceptons, grassroots corrupton, IV logt, Russa, RLMS, socal 1 Natonal Research Unversty Hgher School of Economcs. Economcs Department. Lecturer. E-mal: arassadovskaya@hse.ru 2 Natonal Research Unversty Hgher School of Economcs. Economcs Department. Assstant professor. E-mal: aastov@hse.ru 3 Ths workng paper comprses research fndngs from the Employment, trust and satsfacton - lookng for regulartes Project # carred out wthn The Hgher School of Economcs Academc Fund Program.

3 1. Introducton Ant-corrupton polcy amed at fghtng aganst large-scale brbery can be effcent only f the socety where t happens has a negatve atttude towards ths phenomenon on the whole. The percepton of grassroots corrupton especally matters because f hgh-level corrupton s excluded, n the case of loyalty t can grow agan from the everyday nteractons. Therefore, t s necessary to understand the roots of acceptance at the low levels to prevent the evoluton and to adopt antcorrupton legslaton. Ths project ams to analyze factors that stmulate loyalty towards brbery n Russa as a representatve of a developng post Sovet country. Followng the exstng lterature, one can derve several reasons for growng crme on the whole and, therefore, brbery. The frst group contans economc factors, such as ncome nequalty (Andrenko, 21) because dfference n wealth causes wsh to redstrbute t, even llegally. Another two groups nsttutonal factors (Caballero and Yared, 21) (Ilzetzk, 211) and socologcal reasons (Tresman, 2) (Luo, 26) are dffcult to separate as they nearly always come together. When a country suffers from socal demoralzaton or nacton, t s often the result of weak nsttutons. Levn and Satarov (Levn and Satarov, 2) menton that transmsson strengthens mproperly organzed relatons, whch means that weaknesses of the state n socalst regmes contnue to grow, but after global changes these mechansms can no longer functon as they used to. Therefore, t s mportant to study corrupton at the low-level, as t reflects the tradtons n a socety and cause ncrease n corrupton. Moreover, we suppose, that t s worth lookng at the brbe-gvers nstead of brbe-takers. These ndvduals are partly forced to brbe by the bureaucrats drectly or ndrectly or by the envronment, but n most cases t s a ratonal choce. For that reason, we can judge them as the force that stmulates corrupton growth too, snce f they dd not accept the brbery nsttuton t would vansh. Furthermore, contrary to most crme and corrupton research, we suggest that ths problem should be analyzed not on the aggregated level, but usng mcro-data, as the percepton of brbery s an ndvdual ssue. Consequently, the man queston for ths research s to defne key factors whch accommodate brbery n Russa and to compare the results wth post Sovet and European countres. The questons we ask are the followng. Does ncome nequalty affect the wllngness to pay brbes? If not, are there any other factors, for example are people brought up n the USSR more wllng to pay brbes and why? 3

4 2. Data and methodology 2.1. The sample To analyze corrupton percepton at mcro-level we use the data from the 26 Russa Longtudnal Montorng Survey, RLMS-HSE. Ths survey was conducted by the Hgher School of Economcs and JSC Demoscope n partnershp wth the Carolna Populaton Center, (Unversty of North Carolna at Chapel Hll), the Insttute of Socology RAS (RLMS-HSE). There were 1469 observatons n ths wave of survey. We also use data from the European Socal Survey (ESS), held by the Centre for Comparatve Socal Surveys at Cty Unversty London, UK. The explaned varables are the followng. 1. The answer to the queston Do you agree that the level of corrupton s decreasng? (see Chart 1) Chart 1. Is the level of corrupton decreasng? 45, 4, 35, 3, 25, 2, 15, % of answers 1, 5,, 1 fully agree 2 mostly agree 3 partly yes, partly no 4 mostly dsagree 5 totally dsagree 2. The answer to the queston Have you nformally pad to an offcal for servces n the last month? (see Chart 2, Chart 3). The servces mentoned n ths queston are: muncpal servces, property regstraton servces, cvl regstraton servces, polce, courts, road polce and medcal servces (consultaton, addtonal consultaton, scheduled examnaton, treatment n hosptal, medcne). 4

5 Chart 2. Informal payments n socal servces, % of answers The sum of ddn t pay brbe and pad brbe counts for the total percent of respondents who clamed to have nteractons wth a partcular servce. The remanng percent represents those who dd not clam to have nteractons. 2, 18, 16, 14, 12, 1, 8, 6, 4, 2,, Ddn't pay brbe Pad brbe Chart 3. Informal payments n medcal servces, % of answers The sum of ddn t pay brbe and pad brbe counts for the total percent of respondents who clamed to have nteractons wth a partcular servce. The remanng percent represents those who dd not clam to have nteractons. 45, 4, 35, 3, 25, 2, 15, Ddn't pay brbe Pad brbe 1, 5,, Medcal consultaton Addtonal medcal consultaton Sсheduled examnaton Treatment (n hosptal) Medcne One can see n Chart 1 that more than 7% of the respondents mostly or totally dsagree that the level of corrupton s decreasng. We also cannot say that t s growng accordng to the data, snce I don t agree that t s decreasng can be nterpreted as I thnk t s constant. 5

6 Nevertheless, f less than a thrd of the sample clam a decrease n corrupton level n Russa, we can judge that the problem s stll of hgh mportance for ths country. The Corrupton Percepton Index (CPI) also supports ths clam. Accordng to ths ndex, before 26 (the year of the survey) the absolute value of CPI slghtly grew under several ponts, but on the whole the ndex remaned almost the same as n 1996 (see Table 1). Ths confrms that RLMS ndvdual data corresponds to the statstcs calculated by experts. Table 1. Corrupton Percepton Index for Russa, Year CPI Ratng Countres ncluded Relatve ratng (ratng / number of countres), % Source: Transparency Internatonal, The presence of corrupton actvty can also be confrmed by the number of nformal payments for socal and medcal servces (Chart 2, Chart 3). The darker parts of the bars correspond to the share of nformally pad servces out of all nteractons and show a hgh percentage of brbes: from 26% n regstraton servces to 6% n road polce, and from 12% n medcne buyng to 67% n hosptal treatment. Of course, we cannot defntely say payng nformally, e.g. gftng sweets to the nurse, s the same as brbng. But, as we stated n the ntroductory part, f people are used to gvng money or presents n everyday lfe for the servces 6

7 they have to receve for offcal payments or ever for free, that can result n hgh-level corrupton, whch wll not face deprecaton. The ndependent varables, accordng to the hypotheses tested, are dvded nto two groups: economc (log of real ncome) and socal captal (fear to lose job, self-reported authorty n socety, self-estmated tolerance between people, self-reported dstrustng colleagues and boss). We clam that f an ndvdual has strong and healthy relatons n socety,.e. hgh socal captal, that can be represented by no fear of losng job, hgh authorty n the socety, hgh-level estmaton of tolerance and hgh trust. And as corrupton substtutes formal nsttutons, the qualty of nformal ones should affect the propensty to brbe. We also control for gender, age, occupaton, martal status, havng subordnates and workng n the state organzaton Research methodology The hypotheses are tested usng 3-step IV ordered logt regressons (condtonal mxed processes). As we want to know, whether corrupton n Russa s more an economc or a socal phenomenon, frst of all, we test for the relevance of ncome n the percepton of corrupton. Then we consder the effect of socal captal. It seems to be endogenous to corrupton percepton because these varables may be determned smultaneously and nfluence each other and be nfluenced by the same parameters of the envronment or the same latent characterstcs of the respondent. Therefore, several nstruments for dstrust (and other self-reported varables) are suggested accordng to Card (Card, 21), Nye (Nye et al., 212) and partly heurstcally. Self-reported dstrustng colleagues and boss s nstrumented accordng to Nye by educaton, whch s n turn nstrumented by bologcal trats (heght). In Nye s research a sgnfcant relatonshp between dstrust and human captal was revealed, and the use of heght as an nstrument s shown to be strong here. But as bologcal trats can only affect dstrust through the nstrumented varable, but not drectly, the relatonshp become more complex. We had a model y y x 1 x 1 [ y * ] z 1 x, where y * s a latent varable, y s the observed bnary or ordered varable, x 1 s a vector of explanng varables, x 2 s a vector of controls, and z s a vector of nstruments for x 1. Then we come to the model lke 2 (1) 7

8 y y x z 1 x 1 [ y _ sc z 1 * ] u x, 2 (2) where z _sc (one of the socal captal nstruments) also appears to be endogenous and s treated wth nstruments u. Followng Nye s suggeston to use an average grade as a proxy for human captal we use the level of educaton as a proxy. That s where the three stages of estmaton come from. Educaton level s regressed on heght n the frst step, then the predcted value of educaton s used to predct dstrust. Fnally, the predcted dstrust s put n the base model. Other nstruments tended to be the followng. a) Fear of job loss s nstrumented by unemployment n the regon, whch s exogenous to each partcular ndvdual. b) Self-reported authorty n socety s replaced by the presence of chronc dseases, as beng bounded by some ndspostons may make a person thnk that others rule the lfe more. c) Self-estmaton of tolerance between people we nstrument by membershp n Communst Party before 1991 of famly members snce f parents or other relatves were communsts that may result n the ndvdual s belef that all people are equal and can equally take part n socal lfe; and at the same tme relatves membershp n the party s not correlated wth characterstcs of the respondent (for the use of famly bography nstruments see Card (Card, 21)). However not all of the nstruments proved to be nherently strong. In order to avod extra bas, based on the contngency tables (see Appendx), the number of doubtful varables was reduced to two: dstrustng boss and lack of fear about job loss. It s worth notcng that though horzontal and vertcal trust should be dstngushed (Walls et al., 1998) (Anheer and Kendall, 22) as the marks of bondng and brdgng socal captal, respectvely, for ths sample these varables are closely related, therefore, they do not reflect dfferent characterstcs. 3. Results Analyss of corrupton dynamcs estmaton by the respondents shows that real wage s not relevant to the atttude towards corrupton changes n Russa. The same result remans for brbng, though followng the exstng lterature and heurstc assumptons we expect ncome to determne wllngness to pay (see Table 2, 3 and 4). Only for payng nformally to the road polce ncome s sgnfcant (wth 9% confdence nterval), whch can result from that respondents were asked whether they addressed a partcular servce, so t s hghly probable that only ncome-correlated road polce servces are counted here. 8

9 To check the robustness of ncome nsgnfcancy we excluded the mpact of endogenous varables on the coeffcent sgn (as we are nterested not n the extent, but only n the drecton of nfluence). We also excluded and ncluded endogenous varables one by one, and the coeffcent retaned the same sgn, consderng 95% confdence nterval. Moreover, both lnear and U-shaped specfcatons on ncome were tested and t was not sgnfcant n any case (results omtted). Thus, though corrupton s an economc crme, n Russa s example we can judge that t s not an economc problem. Table 2. Results for the atttude towards corrupton changes n Russa Explanng varable / Control Coeffcent Real wage -.87 Dstrust boss.156** Lack of fear to lose job.2*** Gender (female).78* Sngle -.29 Subordnates State organzaton.25 Probablty: ~ p<.2, + p<.1, * p<.5, ** p<.1, *** p<.1 The summarzed results of the IV estmaton are presented n Tables 2, 3 and 4, and the ntermedate stages can be seen n the Appendx. Contrary to ncome, socal captal varables are sgnfcant for both vew on corrupton dynamcs and nformal payments n most part of the presented servces. The less trust an ndvdual feels to the boss the more lkely he or she s to dsagree wth the statement on corrupton decrease. That tells about the low level of brdgng socal captal: lack of vertcal relatons s compensated by grafts. And the same remans for the exact loyalty f we nterpret payng nformally as beng loyal to corrupton. It s notable, though, that dstrustng boss has a robust through changng the servce mpact sgn, whereas the drecton of fear to lose job nfluence s dfferent for dfferent servces. We suggest that as fear of job loss reflects the presence of socal lnks that can help to fnd a new one, the type of socal captal sgnfcant for payng nformally for socal and medcal servces s dfferent: partcularly, bondng for the latter and brdgng for the frst. 9

10 Muncpal servces Table 3. Results for nformal payments to socal servces Housng Passport Polce Courts Road polce Real wage Dstrust boss Lack of fear to lose job Gender (female).184~.335*.282* ~ -.429*** -.475** -.64***.184~ ** Sngle ~ ~.1 Subordnates ~ State organzaton ~ *.116 Probablty: ~ p<.2, + p<.1, * p<.5, ** p<.1, *** p<.1 The estmaton shows that ncome as the ndcator of dfferent ablty to pay or as an nequalty factor does not nfluence the esteem of corrupton level n Russa or the act of brbery n whch the respondent has been nvolved. At the same tme, socal captal matters for both aspects under research, whch means that corrupton loyalty n Russa can be a matter of trust that comes from Sovet tmes, when the socal captal was bult. Some useful conclusons can also be made from the sgnfcance of control varables; however they are not related to the hypotheses tested. For the frst dependent varable women are less wllng to agree wth the statement. Perhaps, women are more suspcous, more frequently face brbery, or are more lkely to trust common belefs and judge from mass meda nformaton about growng number of brbery trals that t comes from growng brbery cases not from better regulatory performance. Gender s sgnfcant for payng polce nformally, but not sgnfcant for other servces. The same happens to other controls: they are not robust through servces. As the sample s balanced, self-selecton bas s excluded here. Therefore we can conclude that n Russa when makng a decson to brbe, people face dfferent types of dscrmnaton, probably comng from a tradton n ths or that partcular muncpal organzaton. 1

11 Table 4. Results for nformal payments to medcal servces Consultaton Addtonal consultaton Examnaton Real wage ~ -.25 Dstrust boss Lack of fear to lose job ***.44* -.523*** Gender (female) ~ Sngle Subordnates State organzaton -.19~ Probablty: ~ p<.2, + p<.1, * p<.5, ** p<.1, *** p<.1 A large part of the exstng research sees the nature of corrupton growth n post Sovet countres n ther nsttutonal hstory (Murphy, 23) (Lndbeck, 1998). From ths sample t has been dscovered that for Russa corrupton percepton s not a matter of money, but a socal ssue. Therefore, we can share the pont of vew that corrupton loyalty can be a feature of postsocalstc natons. In order to reveal the effect of Sovet-born respondents we have tested for dfferences n model between people who were born before and after 1977, as t s suggested by the survey. No sgnfcant dfference between these two groups has been revealed, therefore results are omtted. Stll, we suppose that lack of trust, that nfluences corrupton percepton, comes from Sovet tmes. To check ths, we used data from the European Socal Survey (ESS) of the same year. The chart below shows the dstrbuton of answers to the queston Do you thnk that most people should be trusted or you should you always be suspcous to them? for Russa, Ukrane, Estona and all other European countres ncluded n ESS (aggregated). 11

12 Densty Densty Densty Densty Chart 4. Trust densty for ESS survey Russa Ukrane trust Kernel densty estmate Normal densty kernel = epanechnkov, bandwdth = trust Kernel densty estmate Normal densty kernel = epanechnkov, bandwdth =.5399 Estona others trust Kernel densty estmate Normal densty kernel = epanechnkov, bandwdth = trust Kernel densty estmate Normal densty kernel = epanechnkov, bandwdth =.2693 One can see that for former USSR members, Russa and Estona, there s a peak at low trust. For Estona, whch n 24 became a European Unon member, the densty looks smlar to the dstrbuton of answers for all other European countres: hgher percentage near the mean value of trust and several peaks on the rght comparng to the normal dstrbuton. From ths bref comparatve analyss we cannot judge that there are ndeed dssmlartes between socal captal n transton countres and developed European countres, but stll some nterestng patterns have been revealed. Thus further research may am to deepen the background of dfferences n trust and consequently corrupton percepton n countres wth dfferent hstory. 4. Concluson The research shows that ncome nequalty does not nfluence ether atttude towards corrupton or facts of brbe gvng from the respondent. On the other hand, the hypothess about the relaton between socal dstrust and corrupton percepton has not been rejected. Moreover, t has been dscovered that facts of brbe gvng seem to reflect dscrmnaton towards typcal groups of people n each partcular organzaton, whch, n our opnon, prove the dea that grassroots brbery exsts n Russa by force of habt comng from Sovet tmes. 12

13 Consequently, we turn to the comparson of trust determnants n post Sovet countres: Russa, Ukrane, Estona and other European countres, usng ESS. We dscover that even the level and dstrbuton of trust n Russa and Ukrane dffers from EU and Estona.. In further research, except for the dynamcs n general, t would also be relevant to explore the exstence of structural break for Estona after 24 when t joned the EU. If the hypothess s not rejected, that wll mean that socalst regmes nfluence corrupton progress whereas membershp to the EU postvely nfluences socal captal and therefore corrupton percepton. That may lead to decsons about the needs of polcy changes n Russa: probably not drectly n ant-corrupton root, but targetng overall socal health. References Andrenko, Y., 21. Explanng Crme Growth n Russa durng Transton: Economc and Crmnometrc Approach. Cent. Econ. Fnanc. Res. Anheer, H., Kendall, J., 22. Interpersonal trust and voluntary assocatons: examnng three approaches. Br. J. Socol. 53, Caballero, R.J., Yared, P., 21. Future rent-seekng and current publc savngs. J. Int. Econ. 82, do:1.116/j.jnteco Card, D., 21. Estmatng the return to schoolng: Progress on some persstent econometrc problems. Econometrca 69, Ilzetzk, E., 211. Rent-seekng dstortons and fscal procyclcalty. J. Dev. Econ. 96, do:1.116/j.jdeveco Levn, M., Satarov, G., 2. Corrupton and nsttutons n Russa. Eur. J. Polt. Econ. 16, Lndbeck, A., Swedsh lessons for post-socalst countres. Luo, Y., 26. Poltcal behavor, socal responsblty, and perceved corrupton: A structuraton perspectve. J. Int. Bus. Stud. 37, Murphy, J., 23. Cvl socety and socal captal n the post-socalst Russan north. Polar Geogr. 27, Nye, J., Androushchak, G., Deserto, D., Jones, G., Yudkevch, M., 212. What Determnes Trust? Human Captal vs. Socal Insttutons: Evdence from Manla and Moscow. Hum. Cap. Vs Soc. Inst. Evd. Manla Mosc. Novemb Hgh. Sch. Econ. Res. Pap. No WP BRP 18. Tresman, D., 2. The causes of corrupton: a cross-natonal study. J. Publc Econ. 76, Walls, A., Crocker, J.P., Schechter, B., Socal captal and communty buldng: Part one. Natl. Cv. Rev. 87,

14 Appendx Table A1. Contngency table of endogenous varables* Dstrust boss Dstrust boss 1 Dstrust colleagues Dstrust generally Lack of fear to lose job.6376* (3.7e+3).825* ( ) -.12* ( ) Dstrust colleagues * (1.4116) -.546* ( ) Dstrust generally 1.77 ( ) Lack of fear to lose job 1 Personal authorty n the socety Tolerance between more and less nfluental socety members Personal * -.649* -.392*.846* 1 authorty n the socety ( ) ( ) (75.124) ( ) Tolerance nfluental socety members between more and less.1277* ( ).628* ( ).18* ( ) -.668* (56.111) * (1.6e+3) 1 * γ-coeffcents of Goodman and Kruskal n the frst lne, Pearson s χ2n parentheses, sgnfcant relatons marked wth a star. Table A2. Intermedate estmatons (corrupton changes) Corrupton changes 1 st stage (dependent varable - educaton) heght.13*** Log lkelhood χ nd stage (dependent varable dstrust boss) educaton.66+ Probablty: ~ p<.2, + p<.1, * p<.5, ** p<.1, *** p<.1. 14

15 Table A2.2 Intermedate estmatons (nformal payments) Muncpal servces Housng Passport Polce Courts Road polce 1 st stage (dependent varable - educaton) heght.32***.9**.57***.19*.86**.51* Log lkelhood χ nd stage (dependent varable dstrust boss) educaton Consultaton 1 st stage (dependent varable - educaton) Addtonal consultaton Examnaton heght.38*.88*.46** Log lkelhood χ nd stage (dependent varable dstrust boss) educaton Probablty: ~ p<.2, + p<.1, * p<.5, ** p<.1, *** p<.1. Anastasa V. Rassadovskaa, Andrey V. Astov, 214 Contact nformaton Anastasa Rassadovskaa Natonal Research Unversty Hgher School of Economcs (Nzhny Novgorod, Russa). Economcs Department. Lecturer. E-mal: arassadovskaya@hse.ru asyaorlova9@rambler.ru tel. (+7) Andrey Astov Natonal Research Unversty Hgher School of Economcs (Nzhny Novgorod, Russa). Economcs Department. Assstant Professor E-mal: aastov@hse.ru Any opnons or clams contaned n ths Workng Paper do not necessarly reflect the vews of HSE. 15