Political Corruption, Economic Incentive, Educational Resource Input, and the Quality of Human Capital: A Panel Analysis Over Twenty-Five Years for the Fifty U.S. States

Abstract

This paper uses panel regression analysis on annual data for the fifty states for the period 1980 to 2004 to estimate the potential impact of political corruption on the quality of human capital, as measured by mean state student performance on scholastic aptitude math and verbal exams. The findings are consistent with the hypothesis that political corruption has a negative effect on the quality of human capital, and, as a result, a detrimental effect on economic growth. In addition, the results of the paper suggest that economic incentive also matters for educational performance, and that, unlike the findings of some earlier studies, input into the educational process, in terms of expenditure per pupil, has a positive effect on educational performance.