A Political Economy Explanation for In-kind Redistribution: The Interplay of Corruption and Democracy
AbstractThis paper identifies a novel political-economy explanation for the observed variation in the cash and in-kind (basic health care, public housing or food stamps) mixture of social transfers. We put forward the hypothesis that the share of in-kind transfers is positively correlated with corruption in democratic countries. The argument is derived in a theoretical model which assumes that it is easier for politicians to appropriate cash transfers than in-kind transfers. Voters in corrupt countries know that cash transfers invite corrupt behavior and therefore they elect parties that opt for in-kind redistributive measures. The empirical analysis for 34 OECD countries over the 1984 – 2007 period provides robust evidence in favor of this hypothesis. Moreover, the positive correlation between the in-kind share of social transfers and perceived corruption is stronger for the “most democratic” OECD countries and in countries with specific institutional characteristics such as free media that further enhance democratic accountability.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Department of Economics, University of Konstanz in its series Working Paper Series of the Department of Economics, University of Konstanz with number 2012-25.
Length: 31 pages
Date of creation: 19 Nov 2012
Date of revision:
Find related papers by JEL classification:
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-06 (All new papers)
- NEP-CDM-2012-12-06 (Collective Decision-Making)
- NEP-PBE-2012-12-06 (Public Economics)
- NEP-POL-2012-12-06 (Positive Political Economics)
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.:
- Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, vol. 78(4), pages 691-700, September.
- Dani Rodrik, 1998.
"Why Do More Open Economies Have Bigger Governments?,"
Journal of Political Economy,
University of Chicago Press, vol. 106(5), pages 997-1032, October.
- Rodrik, Dani, 1996. "Why do More Open Economies Have Bigger Governments?," CEPR Discussion Papers 1388, C.E.P.R. Discussion Papers.
- Dani Rodrik, 1996. "Why Do More Open Economies Have Bigger Governments?," NBER Working Papers 5537, National Bureau of Economic Research, Inc.
- Hessami, Zohal, 2010. "Corruption and the Composition of Public Expenditures: Evidence from OECD Countries," MPRA Paper 25945, University Library of Munich, Germany.
- Lundholm, M. & Ohlsson, H., 1995.
"Wages for Women and Publicly Financed Day Care,"
1995-23, Uppsala - Working Paper Series.
- Besley, T. & Coate, S., 1989.
"Public Provision Of Private Goods And The Redistribution Of Income,"
36, Princeton, Woodrow Wilson School - Discussion Paper.
- Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-84, September.
- Hessami, Zohal & Uebelmesser, Silke, 2013.
"Empirical determinants of in-kind redistribution: Partisan biases and the role of inflation,"
Elsevier, vol. 118(2), pages 318-320.
- Hessami, Zohal & Silke, Uebelmesser, 2012. "Empirical determinants of in-kind redistribution: Partisan biases and the role of inflation," MPRA Paper 38494, University Library of Munich, Germany.
- Zohal Hessami & Silke Uebelmesser, 2012. "Empirical Determinants of In-kind Redistribution: Partisan Biases and the Role of Inflation," Working Paper Series of the Department of Economics, University of Konstanz 2012-20, Department of Economics, University of Konstanz.
- De Donder, Philippe & Hindriks, Jean, 1998.
" The Political Economy of Targeting,"
Springer, vol. 95(1-2), pages 177-200, April.
- Janet Currie & Firouz Gahvari, 2008.
"Transfers in Cash and In-Kind: Theory Meets the Data,"
Journal of Economic Literature,
American Economic Association, vol. 46(2), pages 333-83, June.
- Janet Currie & Firouz Gahvari, 2007. "Transfers in Cash and In Kind: Theory Meets the Data," NBER Working Papers 13557, National Bureau of Economic Research, Inc.
- Harry Ter Rele, 2007. "Measuring The Lifetime Redistribution Achieved By Dutch Taxation, Cash Transfer And Non-Cash Benefits Programs," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 335-362, 06.
- Giovanni S.F. Bruno, 2004.
"Approximating the Bias of the LSDV Estimator for Dynamic Unbalanced Panel Data Models,"
KITeS Working Papers
159, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2004.
- Bruno, Giovanni S.F., 2005. "Approximating the bias of the LSDV estimator for dynamic unbalanced panel data models," Economics Letters, Elsevier, vol. 87(3), pages 361-366, June.
- Jain, Arvind K, 2001. " Corruption: A Review," Journal of Economic Surveys, Wiley Blackwell, vol. 15(1), pages 71-121, February.
- Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
- Aidt, Toke & Dutta, Jayasri & Sena, Vania, 2008.
"Governance regimes, corruption and growth: Theory and evidence,"
Journal of Comparative Economics,
Elsevier, vol. 36(2), pages 195-220, June.
- Toke Aidt & Jayasri Dutta & Vania Sena, 2006. "Governance Regimes, Corruption and Growth: Theory and Evidence," Discussion Papers 15_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
- Gupta, Sanjeev & de Mello, Luiz & Sharan, Raju, 2001.
"Corruption and military spending,"
European Journal of Political Economy,
Elsevier, vol. 17(4), pages 749-777, November.
- Giovanni S. F. Bruno, 2005.
"Estimation and inference in dynamic unbalanced panel-data models with a small number of individuals,"
StataCorp LP, vol. 5(4), pages 473-500, December.
- Giovanni S.F. Bruno, 2005. "Estimation and inference in dynamic unbalanced panel data models with a small number of individuals," KITeS Working Papers 165, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jun 2005.
- Bearse, P. & Glomm, G. & Janeba, E., 2000. "Why poor countries rely mostly on redistribution in-kind," Journal of Public Economics, Elsevier, vol. 75(3), pages 463-481, March.
- Gouveia, Miguel, 1997.
" Majority Rule and the Public Provision of a Private Good,"
Springer, vol. 93(3-4), pages 221-44, December.
- Miguel Gouveia, 1997. "Majority rule and the public provision of a private good," Public Choice, Springer, vol. 93(3), pages 221-244, December.
- Blomquist, Suren & Christiansen, Vidar, 1995. " Public Provision of Private Goods as a Redistributive Device in an Optimum Income Tax Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 547-67, December.
- Theodore C. Bergstrom & S�ren Blomquist, .
"The Political Economy of Subsidized Day Care,"
ELSE working papers
015, ESRC Centre on Economics Learning and Social Evolution.
- Alistair Munro, 1990.
"Self-Selection and Optimal In-Kind Transfers,"
Working Papers Series
90/3, University of Stirling, Division of Economics.
- Balestrino, Alessandro, 1999. " The Desirability of In-Kind Transfers in the Presence of Distortionary Taxes," Journal of Economic Surveys, Wiley Blackwell, vol. 13(4), pages 333-54, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gundula Hadjiani).
If references are entirely missing, you can add them using this form.