Self-serving dictators and economic growth
AbstractA new line of theoretical and empirical literature emphasizes the pivotal role of fair institutions for growth. We present a model, a laboratory experiment, and a simple cross-country regression supporting this view. We model an economy with an unequal distribution of property rights, in which individuals can free-ride or cooperate. Experimentally we observe a dramatic drop in cooperation (and growth), when inequality is increased by a selfserving dictator. No such effect is observed when the inequality is increased by a fair procedure. Our regression analysis provides basic macroeconomic support for the adverse growth effect of the interaction between the degree and the genesis of inequality. We conclude that economies giving equal opportunities to all are not likely to suffer retarded growth due to inequality in the way economies with self-serving dictators will.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 67 (2008)
Issue (Month): 3-4 (September)
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Web page: http://www.elsevier.com/locate/jebo
Other versions of this item:
- Daniel Haile & Abdolkarim Sadrieh & Harrie A. A Verbon, 2003. "Self-Serving Dictators and Economic Growth," CESifo Working Paper Series 1105, CESifo Group Munich.
- Haile, D. & Sadrieh, A. & Verbon, H.A.A., 2003. "Self-Serving Dictators and Economic Growth," Discussion Paper 2003-120, Tilburg University, Center for Economic Research.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D60 - Microeconomics - - Welfare Economics - - - General
- K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
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