Investigating The Impact of Corruption on the Labor Force Participation Rate

The labor force participation rate is one of the key indicators of the labor market. One of the factors that can affect the labor force participation rate is the corruption index. Therefore, the purpose of this article is to investigate the impact of Transparency International's Corruption Perception Indicators, Kaufman et al.'s (2014) Corruption Control Index, and the International Country Risk Guide Index on labor force participation rates in selected MENA countries during the period 2002-2008. For this purpose, three models were estimated separately. Also in this research, for obtaining reliable results, the Cup-FM Method was used to estimate the model. Results of estimation of all three models showed that a higher corruption index has a negative effect on labor force participation rate and this effect is statistically significant at a 5% significance level. Per capita income and unemployment rate have a significant negative effect on labor force participation rates at the 5% significance level. The effect of urbanization rate on labor force participation rate is positive and this effect is not significant at the 5% level. Education and wages also have a significant positive effect on labor force participation rates at the 5% significance level. Also, the high level of economic development has a positive and significant impact on the labor force participation rate.