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Does corruption affect income inequality and poverty?

Author

Listed:
  • Sanjeev Gupta
  • Hamid Davoodi
  • Rosa Alonso-Terme

Abstract

This paper provides evidence that high and rising corruption increases income inequality and poverty. An increase of one standard deviation in corruption increases the Gini coefficient of income inequality by about 11 points and income growth of the poor by about 5 percentage points per year. These findings are robust to use of different instruments for corruption and other sensitivity analyses. The paper discusses several channels through which corruption may affect income inequality and poverty. An important implication of these findings is that policies that reduce corruption will most likely reduce income inequality and poverty as well. Copyright Springer-Verlag Berlin Heidelberg 2002

Suggested Citation

  • 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, March.
  • Handle: RePEc:spr:ecogov:v:3:y:2002:i:1:p:23-45
    DOI: 10.1007/s101010100039
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    Keywords

    Key words: Corruption; income inequality; poverty; JEL Classification: D73; D31; I32;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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