Fighting Corruption in Education: What Works and Who Benefits?‡ Oana Borcan Mikael Lindahl Andreea Mitrut University of Gothenburg Uppsala University, University of Gothenburg CESifo, IFAU, IZA, UCLS UCLS This version: February 2015 We investigate the efficiency and distributional consequences of a corruption- fighting initiative in Romania targeting the endemic fraud in a high-stakes high school exit exam, which introduced CCTV monitoring of the exam and credible punishment threats. We find that punishment coupled with monitoring was effective in reducing corruption. Estimating the heterogeneous impact for students of different ability, poverty status, and gender, we show that fighting corruption led to efficiency gains (ability predicts exam outcomes better) but also to a worrisome score gap increase between poor and non-poor students. Consequently, the poor students have reduced chances to enter an elite university. Keywords: corruption; high-stakes exam; bribes; monitoring and punishment JEL codes: I21, I24, K42 ‡E-mail:
[email protected],
[email protected] and
[email protected] (corresponding author), respectively. All errors are our own. Andreea Mitrut gratefully acknowledges support from the Jan Wallanders and Tom Hedelius Foundation. Mikael Lindahl is a Royal Swedish Academy of Sciences Research Fellow supported by a grant from the Torsten and Ragnar Söderberg Foundation, and also acknowledges financial support from the Scientific Council of Sweden and the European Research Council [ERC starting grant 241161].* We thank Matthew Lindquist, Randi Hjalmarsson, Brian Knight, Marco Manacorda, Erich Battistin, Pedro Dal Bo, and David Weil for useful comments and discussions. Seminar participants at Brown University, the “Economics of Education and Education Policy” workshop, IFAU, Uppsala, UCLS, Stockholm School of Economics (SITE), SSB, Oslo, and Gothenburg University provided useful comments.