Study Links Corruption With Job Losses

By John Christoffersen

Associated Press

HARTFORD — Political corruption has a greater effect than tax increases on a state’s job market, according to a study released Tuesday.

The study, which covered a ten-year period, concludes that for every conviction per 100 elected officials, job growth declines by 1.1 percentage points. The effect of corruption was 30 percent greater than that of raising taxes, the study found.

The study was conducted by the Connecticut Center for Economic Analysis at the University of Connecticut and published in The Connecticut Economy. It concludes that honest government may be even more important than a favorable tax environment in sustaining strong economic performance.

The study acknowledged the difficulty of quantifying political corruption. It looked at the federal conviction and job growth rates in each state from 1986 through 1996.

To determine the effect of corruption on economic performance, the analysis also looked at other possible influences on job growth, such as taxes, wages, education, and population changes.

The findings come in the wake of a series of political scandals in Connecticut at the state and municipal levels. Two mayors and the state treasurer were convicted, while Gov John G. Rowland is the subject of a federal corruption investigation.

“The evidence suggests that could cost us some significant economic growth and performance,” said Steven Lanza, executive editor of The Connecticut Economy.

Corruption creates an environment of uncertainty for businesses, Lanza said.

“It means the rules of the game are not the same for everyone,” Lanza said.

Attorney General Richard Blumenthal, who is investigating allegations of corruption in the Rowland administration, called the findings “startling.”

“This kind of analysis provides very strong justification for this kind of investigative effort,” Blumenthal said.

Connecticut ranked 29th in a state-by-state comparison for the period 1986–1996. The state’s record of 1.08 convictions per 100 elected officials over that period compared to the 2.12 convictions average across all states.

To avoid a repeat of the scandals in Connecticut, the study recommends requiring elected officials to regularly make their personal finances public as a way to detect early warning signs of potentially unethical or criminal behavior.

The Connecticut Economy also reported an improving outlook for jobs in Connecticut, citing positive signs such as factory workers clocking longer hours, continued hiring of temporary workers and more activity at Bradley International Airport. It predicts jobs will grow at a 0.5 percent rate, or 8,000 jobs, in the next year.

But the report also warns that outsourcing abroad puts Connecticut workers in direct competition with foreign labor.

Despite its large budget deficits in recent years, Connecticut is among 21 states whose projected shortfalls are less severe than the other states. The report also focuses on falling crime rates in Connecticut, but notes that the trend has come with higher costs for prisons.