Effect of Corruption on Human Capital in Franc Zone Countries: An Opportunity Cost Analysis

Abstract

The objective of this paper is to analyze the impact of corruption on human capital in African Franc zone countries. Assuming that the representative agent is rational, we develop a theoretical model in which effort, the real component of the human capital accumulation process, encompasses learning time, the learner’s personal resources, and the educational public good. The learner makes a trade-off between effort and corruption according to the opportunity cost of each option. Thus, in an environment where corruption (large and small) is endemic and where there are very few sanction mechanisms, the learner considers it rational to bribe at the expense of effort. Empirical analysis shows that a drop in the corruption perception index (reflecting an increase in corruption) of one-point leads to a drop in the human capital index of 0.175 percentage points. On the other hand, the impact is positive for public spending on education, official development assistance, real GDP per capita, and the management ratio. These variables reduce the opportunity cost of the effort. A number of recommendations are put forward with a view to reducing the cost of effort and increasing the cost of corruption.