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Why is Corruption Less Harmful to Income Inequality in Latin America?

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  • Dobson, Stephen
  • Ramlogan-Dobson, Carlyn

Abstract

Conventional wisdom says corruption is bad for income inequality. But recent research on Latin America finds a trade-off between corruption and inequality and suggests this is due to the large informal sector in the region. Using data on a large sample of countries we find that the informal sector impacts the link between corruption and inequality. In particular, the marginal impact of corruption becomes negative once the informal sector becomes large. This is true in Latin America and more generally. Corruption reducing policies should be accompanied by measures that help displaced informal sector workers.

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  • Dobson, Stephen & Ramlogan-Dobson, Carlyn, 2012. "Why is Corruption Less Harmful to Income Inequality in Latin America?," World Development, Elsevier, vol. 40(8), pages 1534-1545.
  • Handle: RePEc:eee:wdevel:v:40:y:2012:i:8:p:1534-1545 DOI: 10.1016/j.worlddev.2012.04.015
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    Cited by:

    1. Michaël Aklin & Patrick Bayer & S. Harish & Johannes Urpelainen, 2014. "Who blames corruption for the poor enforcement of environmental laws? Survey evidence from Brazil," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(3), pages 241-262, July.
    2. Jiancai Pi & Yu Zhou, 2015. "The impacts of corruption on wage inequality and rural–urban migration in developing countries," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 753-768, May.
    3. repec:wsi:serxxx:v:62:y:2017:i:02:n:s0217590815501167 is not listed on IDEAS
    4. Wutich, Amber & Beresford, Melissa & Carvajal, Cinthia, 2016. "Can Informal Water Vendors Deliver on the Promise of A Human Right to Water? Results From Cochabamba, Bolivia," World Development, Elsevier, vol. 79(C), pages 14-24.
    5. repec:eco:journ1:2017-04-55 is not listed on IDEAS
    6. Bienvenido Ortega & Antonio Casquero & Jesús Sanjuán, 2016. "Corruption and Convergence in Human Development: Evidence from 69 Countries During 1990–2012," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 691-719, June.
    7. Denvil Duncan & Klara Sabirianova Peter, 2016. "Unequal inequalities: Do progressive taxes reduce income inequality?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 762-783, August.

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