Corruption costs lives: a cross-country study using an IV approach

Abstract

This study quantitatively estimates the effects of corruption on five major health indicators by using recent cross-country panel data covering 119 countries for the period of 2005-2011. The corruption indicators provided by the World Bank and Transparency International are used, and both the two-way fixed effect and the two-stage least squares approaches are employed for our estimation. The estimation results show that, in general, corruption is negatively associated with a country's health outcomes. A lower level of corruption or a better control of corruption in a country can lead to longer life expectancy, a lower infant mortality rate and a lower under-five mortality rate for citizens. However, our estimation finds no significant association between corruption and individual diseases including human immunodeficiency virus prevalence and tuberculosis incidence. The findings suggest that corruption reduction itself is an effective method to promote health. Copyright © 2015 John Wiley & Sons, Ltd.

Keywords: corruption; cross-country study; health; instrument variable estimation.