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Inequality and guard labor, or prohibition and guard labor?

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  • Geloso, Vincent
  • Kufenko, Vadim

Abstract

In this paper, we consider whether or not inequality forces society to expend more resources on supervision which imposes an extra cost to doing business. Some argue that since inequality deteriorates social capital, there is a greater need for supervisory labor which is a costly burden to bear. We propose an alternative (but not mutually exclusive) explanation. We argue that the war on drugs leads to institutional decay and lower levels of trust which, in turn, force private actors to deploy resources to supervise workers and protect themselves. Our explanation complements the argument regarding the link between inequality and guard labor.

Suggested Citation

  • Geloso, Vincent & Kufenko, Vadim, 2017. "Inequality and guard labor, or prohibition and guard labor?," Hohenheim Discussion Papers in Business, Economics and Social Sciences 06-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    • Handle: RePEc:zbw:hohdps:062017
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    More about this item

    Keywords

    Economic Growth; Inequality; Drugs; Guard Labor;
    All these keywords.

    JEL classification:

    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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