This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Inequality and Corruption

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
You, Jong-Sung (Harvard U)
Khagram, Sanjeev (Harvard U)
Abstract

We propose that income inequality increases corruption. The rich are likely to both have greater motivation and opportunities to engage in bribery and fraud as one means to preserve and advance their status, privileges, and interests while the poor are more vulnerable to extortion at higher levels of inequality. While countries with authoritarian regimes are likely to have greater levels of corruption on average, the effect of greater inequality on corruption will be higher in democracies, in which the wealthy cannot employ repression and poorer groups are likely to more effectively demand redistribution. Both OLS estimates (for samples of 95 to 122 countries) and IV 2SLS estimates (for samples of 83 to 103 countries) support our arguments, with 2SLS estimates showing stronger statistically significant effects of inequality on corruption, utilizing Transparency International's Corruption Perceptions Index, the World Bank's Control of Corruption Index (average for 1996-2002) and Dollar and Kraay's income inequality data (average Gini for 1950-1999). Surprisingly, the explanatory power of inequality is substantially no less important than conventionally accepted causes of corruption such as economic development. Contrary to conventional wisdom, smaller and not larger government is associated with higher levels of corruption, because higher inequality through corruption is associated with lower tax rates as well as lower government transfers and subsidies.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://ksgnotes1.harvard.edu/Research/wpaper.nsf/rwp/RWP04-001/$File/rwp04_001_khagram_revNov04.pdf
File Format:
File Function:
Download Restriction: no

Publisher Info
Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp04-001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Jan 2004
Date of revision:
Handle: RePEc:ecl:harjfk:rwp04-001

Contact details of provider:
Postal: 79 JFK Street, Cambridge, MA 02138
Fax: 617-496-2554
Web page: http://www.ksg.harvard.edu/research/working_papers/index.htm
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Matthew Higgins & Jeffrey G. Williamson, 1999. "Explaining Inequality the World Round: Cohort Size, Kuznets Curves, andOpenness," NBER Working Papers 7224, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
    Other versions:
  3. Alberto Ades & Rafael Di Tella, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September. [Downloadable!] (restricted)
  4. Caroline van Rijckeghem & Beatrice Weder, 1997. "Corruption and the Rate of Temptation - Do Low Wages in the Civil Service Cause Corruption?," IMF Working Papers 97/73, International Monetary Fund.
  5. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Hongyi Li & Lixin Colin Xu & Heng-fu Zou, 2000. "Corruption, Income Distribution, and Growth," Economics and Politics, Blackwell Publishing, vol. 12(2), pages 155-182, 07. [Downloadable!] (restricted)
  7. Dollar, David & Fisman, Raymond & Gatti, Roberta, 2001. "Are women really the "fairer" sex? Corruption and women in government," Journal of Economic Behavior & Organization, Elsevier, vol. 46(4), pages 423-429, December. [Downloadable!] (restricted)
  8. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August. [Downloadable!] (restricted)
  9. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    Other versions:
  10. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December. [Downloadable!] (restricted)
    Other versions:
  11. Alesina, Alberto & Rodrik, Dani, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 465-90, May. [Downloadable!] (restricted)
    Other versions:
  12. Alesina, Alberto, et al, 2003. " Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-94, June. [Downloadable!] (restricted)
    Other versions:
  13. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
  14. Sanjeev Gupta & Hamid Davoodi & Rosa Alonso-Terme, 2002. "Does corruption affect income inequality and poverty?," Economics of Governance, Springer, vol. 3(1), pages 23-45, 03. [Downloadable!] (restricted)
  15. Glaeser, Edward & Scheinkman, Jose & Shleifer, Andrei, 2003. "The injustice of inequality," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 199-222, January. [Downloadable!] (restricted)
    Other versions:
  16. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  17. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October. [Downloadable!] (restricted)
  18. Jeffrey A. Frankel & David Romer, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June. [Downloadable!] (restricted)
  19. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June. [Downloadable!] (restricted)
    Other versions:
  20. Paldam, Martin, 2002. "The cross-country pattern of corruption: economics, culture and the seesaw dynamics," European Journal of Political Economy, Elsevier, vol. 18(2), pages 215-240, June. [Downloadable!] (restricted)
  21. Andrew Leigh, 2006. "Does Equality Lead to Fraternity?," CEPR Discussion Papers 513, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
    Other versions:
  22. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University. [Downloadable!]
  23. John Luke Gallup & Jeffrey D. Sachs, 2000. "The Economic Burden of Malaria," CID Working Papers 52, Center for International Development at Harvard University. [Downloadable!]
  24. Gylfason, Thorvaldur, 2001. "Nature, Power, and Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(5), pages 558-88, November. [Downloadable!] (restricted)
    Other versions:
  25. Jimmy Torrez, 2002. "The effect of openness on corruption," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 11(4), pages 387-403, December. [Downloadable!] (restricted)
  26. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March. [Downloadable!] (restricted)
    Other versions:
  27. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June. [Downloadable!] (restricted)
  28. Milanovic, Branko & Shlomo Yitzhaki, 2001. "Decomposing world income distribution : does the world have a middle class ?," Policy Research Working Paper Series 2562, The World Bank. [Downloadable!]
    Other versions:
  29. Bryan W Husted, 1999. "Wealth, Culture, and Corruption," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 30(2), pages 339-359, June. [Downloadable!] (restricted)
  30. Friedman, Eric & Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 2000. "Dodging the grabbing hand: the determinants of unofficial activity in 69 countries," Journal of Public Economics, Elsevier, vol. 76(3), pages 459-493, June. [Downloadable!] (restricted)
  31. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? Cannot find something on IDEAS? Encourage the publisher to index it! Instructions.

This page was last updated on 2009-12-1.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.