Corruption and welfare

Corruption, which means misuse of public property for personal benefit, is an important thread for the welfare of individual and society. In order to determine the effect of corruption on the level of welfare for countries, analyses of data for the period between 1998 and 2012 from 148 countries were initially included in the study. One-way random effect and fixed effect models were included in the analyses where unbalanced panel data method was employed. Pursuant to the results of the analyses, effect of corruption on personal income is in negative direction and statistically significant. Effects of public expenditure on health, trade gap, urbanization, rate of inflation and rate of unemployment on the welfare were also investigated in the models. The results of the analyses depicts that the relation between public expenditure on health, trade gap and urbanization and the personal income is in positive direction. The relation between rate of inflation and rate of employment and personal income is in negative direction. Effect of corruption on welfare index is the second issue investigated in the study. For this purpose, analyses involving data for the period between 2009 and 2012 from 101 countries were made. Based on the results of the analyses, corruption has a statistically significant effect on welfare in negative direction. Therefore, level of welfare of countries decreases with increasing level of corruption. Key Words: Welfare, Corruption, Personal Income, Social Welfare, Panel Data