How Can Wage Incentives Reduce Corruption? New Evidence from China

While the role of public sector wage levels in combating corruption has long been a highly contentious issue, research identifying the conditions under which such wage incentives become effective is scant. Addressing this gap, this article empirically analyses China’s provincial panel data from 2003 to 2017 using multiple econometric models. The results demonstrate pronounced regional heterogeneity and a threshold effect in how public employees’ relative wages impact regional corruption. Specifically, the effectiveness of wage-related anti-corruption strategies hinges critically on the level of economic development. These findings imply that pay rises alone are unlikely to curb systemic corruption when complementary anti-corruption mechanisms and institutional safeguards are weak or inadequate.