The Impact of Corruption on Social Mobility

In a post for the Brookings Institution, David Dollar laments China’s problematically low social mobility, and offers three factors preventing China from becoming a true land of opportunity: (1) the hukou residential registration system (which restricts labor mobility); (2) locally-funded education (which disadvantages poorer rural communities); and (3) growing corruption–because, as Dollar argues, it is “easier for elite families to pass on status and income to their children when there aren’t clear rules and fair competition.” . However, although the view that corruption inhibits social mobility is widespread, and Dollar’s point is partly correct, in reality the picture is more complex.

Solid evidence about the effect of corruption on social mobility is surprisingly sparse. This is partly because social mobility is potentially influenced by so many factors that it is hard to isolate the impact of any one variable. But also, the impact of corruption on social mobility may depend on other features of the society, and also on the particular type of corruption.

For example, Dollar is correct that sometimes elites use corruption to entrench their position, it is also possible that sometimes “clear rules and fair competition” will not improve social mobility, because the rules are designed to entrench the elites. For example, in rigid class based societies the rules are clear and social mobility is low.  For instance, in India, where the caste system historically determined social structure, corruption may offer the newly wealthy “lower classes” access to previously unavailable economic and political opportunity. Likewise, some have argued that corruption in late 19th and early 20th century America helped socially marginalized immigrant groups move up the ladder–both politically and economically.

Different types corruption may also have different sorts of effects on social mobility. Take access to education. Every year more than eight million high school students in China take the national college entrance examination. Universities set different quotas for each province and students are admitted based on their ranking within each region. It is well known that wealthier cities such as Shanghai have an easier curve than poorer provinces. As a result, equally qualified students from poorer regions are disadvantaged. The informal practice of bribing colleges admissions officers in marginal cases may offer otherwise powerless and geographically immobile students from poorer regions an opportunity to go to college. The damage of corruption on the integrity of higher education is unquestionable. However, in terms of social mobility this practice provides at least one instance where bribery offers a way for the average family to access economic opportunity in an rigid and unfair system.

To be clear, corruption probably does impede social mobility in some cases.  And, even when some forms of corruption do improve social mobility, it might still be the case that this corruption is still bad for society overall.  But the claim that corruption always inhibits social mobility–in China or elsewhere–is not so clear-cut.

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