We explore theoretically and empirically whether social interaction, including local and global interaction, influences the incidence of corruption. We first present an interaction-based model on corruption that predicts that the level of corruption is positively associated with social interaction. Then we empirically verify the theoretical prediction using within-country evidence at the province-level in China during 1998 to 2007. Panel data evidence clearly indicates that social interaction has a statistically significantly positive effect on the corruption rate in China. Our findings, therefore, underscore the relevance of social interaction in understanding corruption.


Suggested citation: Bin Dong, Benno Torgler, Corruption and social interaction: Evidence from China, Journal of Policy Modeling, Volume 34, Issue 6, November–December 2012, Pages 932-947, ISSN 0161-8938, http://dx.doi.org/10.1016/j.jpolmod.2012.04.005