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The allocation of time in public administrations subject to bribery in developing countries: The basic model of labour supplu revisited
Abstract
Abstract. The purpose of this article is to revisit the basic model of labour supply taking into account the existence of corruption in public administrations in developing countries. The worker-consumer programme modified by the integration of bribery shows that at equilibrium, the optimal solution leads to a Marginal Rate of Substitution of leisure consumption equal to the real contractual wage rate plus the actual bribe rate. Because of the latter, the reserve wage is no longer an essential determinant for participating in the labour market. Corruption seems to amplify the substitution and income effects.
Keywords. Time allocation, Bribery-Marginal rate of consumption, Leisure substitution, Reserve wage, Substitution effect, Income effect.
JEL. G11, G17, C53, C58.Keywords
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