The present study addresses a topic neglected by the public administration literature: government corruption and its effects on public service systems. Specifically, the study focuses on the institutionalized form of government corruption and offers a framework to explain how corrupt industry operates. The results indicate that in countries with a high level of corruption, a higher ratio of public expenditure on education is associated with less effective educational outcomes, supporting the “wagon-wheel effect” (i.e., policy aimed to promote public service quality leads to its deterioration). The implications of the results for the administration of public service systems are discussed.


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