More women in parliament to eradicate corruption?

Corruption is a big part of the development puzzle. It is an impediment to growth (Mauro 1995, 1996), reducing firm growth (Fisman and Svensson 1999) and children education (Reinikka and Svensson 2005), and to the general well-being of a society (Helliwell 2004) as everyone’s life, livelihood or happiness depends on the integrity of people in a position of authority (Transparency International 2004). Yet, it remains an enduring and complex phenomenon.

Understanding its causes has been at the forefront of economics research which has been trying to find ways to eradicate it. Different policies have been suggested and put into effect. Among them is the strengthening of the media (Stapenhurst 2000, Duggan and Levitt 2002, Ahrend 2002), the enforcement of the rule of law, higher wages for bureaucrats (Van Rijckeghem and Weder 2001) and the reduction of red tape (Djankov et. al. 2002). Bad governments are opposed to such reforms as they lose discretionary control power. Another suggested policy is the inclusion of a larger share of women in government (Dollar et. al. 1999, Swamy et. al. 2001).

In 1998, Fujimori announced that Peru’s traffic police force would become an all female force while in 2003 the Mexican Customs Service hired only women for a new anti-corruption surveillance force. Also, in Uganda, President Museveni assigned the majority of positions as treasurer to women as this could curb misspending as women "tend not to be so opportunistic" (Goetz 2007). The prime objective of these gender policies was to fight corruption.

Increasing the share of women in government may indeed possibly reduce the general level of corruption of a country. Socio-biological differences between men and women could explain different attitude towards corruption, women being less tolerant of it. These differences in attitude could also be the result of less exposure to corrupt practices, women not being part of the networks, which in turn could also be the result of different attitudes.

The effects of "corruption aversion" could reduce extortion practices and include more whistle blowing which could increase the probability of being caught, especially if the media is free and investigative. It could also reduce bribe offering, since influential businessmen or lobby groups would not know how to bribe the women "outsiders".
The anti-corruption behaviour could also have indirect and more powerful effects. By reducing corruption during the law making process, a bigger share of women in parliament would reduce the creation of bad polices that create rents to collect bribes, such as price controls, red tape, monopolies, tax breaks or other preferential treatments. This would reduce the number of corruption opportunities.
Also, a bigger share of women could change people’s attitude, giving them more confidence in government and institutions and therefore reversing the bad incentives of a corrupt system. When you have confidence in the government, you may have fewer incentives to cheat.

What we want to test now is if adding more women in parliament reduces corruption. The relationship between women in government and corruption is strong and is not hard to establish using a cross section of countries. However, these results suffer from serious endogeneity problems of reverse causality and simultaneity. For example, poor countries are poor because they are corrupt and they are corrupt because they are poor. Also, the press can not be free with a corrupt government, so it is not only a free press that reduces corruption, but also corruption that reduces press freedom. While women in government might reduce corruption, corruption might reduce gender empowerment. This issue was not addressed in the previous studies on gender and corruption.

We use a panel for 132 countries from 1994 to 2006 and seriously control for endogeneity by using cool econometrics methods (xtabond2 in stata).Even though there is less corruption where there is more women in parliament, my results suggest that including more women in parliament will not have an effect on corruption. GDP per capita growth and a stronger legal system appear to be what is needed to fight corruption.