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Who Gains from Non-Collusive Corruption?

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  • Oechslin, Manuel

    (University of Zurich)

  • Reto Foellmi

Abstract

We explore the impact of non-collusive corruption on the wealth distribution. We show that the distributional consequences depend crucially on the degree of capital market imperfections. With perfect capital markets, corruption does not redistribute wealth within the private sector. However, if borrowing is limited, members of the ''middle class'' suffer most since bribery drives them out of the capital market. This makes access to credit easier for wealthy individuals such that a group of them even wins. Finally, we provide cross-country evidence showing that a high level of corruption and a polarization of the distribution go indeed hand in hand.

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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 159.

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Date of creation: 04 Jun 2003
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Handle: RePEc:ecj:ac2003:159

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Keywords: corruption; income inequality; development;

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