Corruption and education in developing countries: The role of public vs. private funding of higher education

Abstract

Corruption reduces the incentives to invest. This is also true for investments in human capital. The paper explains how enrollment in publicly funded higher education institutions affects years of schooling at different corruption levels. Using data from 88 developing countries, we first confirm that corruption negatively correlates with expected years of schooling. Second, we identify a joint effect of corruption and the type of higher education funding in a country: in low-corruption countries, the fraction of public higher education enrollment increases expected years of schooling, while it decreases in high-corruption countries.