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Self-Serving Dictators and Economic Growth

Author

Listed:
  • Daniel Haile
  • Abdolkarim Sadrieh
  • Harrie A. A Verbon

Abstract

A new line of theoretical and empirical literature emphasizes the pivotal role of fair institutions for growth. We present a model, a laboratory experiment, and a simple cross-country regression supporting this view. We model an economy with an unequal distribution of property rights, in which individuals can free-ride or cooperate. Experimentally we observe a dramatic drop in cooperation (and growth), when inequality is increased by a selfserving dictator. No such effect is observed when the inequality is increased by a fair procedure. Our regression analysis provides basic macroeconomic support for the adverse growth effect of the interaction between the degree and the genesis of inequality. We conclude that economies giving equal opportunities to all are not likely to suffer retarded growth due to inequality in the way economies with self-serving dictators will.

Suggested Citation

  • Daniel Haile & Abdolkarim Sadrieh & Harrie A. A Verbon, 2003. "Self-Serving Dictators and Economic Growth," CESifo Working Paper Series 1105, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1105
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp1105.pdf
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    References listed on IDEAS

    as
    1. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
    2. repec:dau:papers:123456789/10091 is not listed on IDEAS
    3. Ernst Fehr & Bettina Rockenbach, 2003. "Detrimental effects of sanctions on human altruism," Microeconomics 0305007, University Library of Munich, Germany.
    4. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    5. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
    6. Guth, Werner, 1995. "An Evolutionary Approach to Explaining Cooperative Behavior by Reciprocal Incentives," International Journal of Game Theory, Springer;Game Theory Society, vol. 24(4), pages 323-344.
    7. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
    8. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    9. Abbink, Klaus & Irlenbusch, Bernd & Renner, Elke, 2000. "The moonlighting game: An experimental study on reciprocity and retribution," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 265-277, June.
    10. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 270-293, December.
    11. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
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    Cited by:

    1. Hopkins, Ed & Kornienko, Tatiana, 2006. "Inequality and growth in the presence of competition for status," Economics Letters, Elsevier, vol. 93(2), pages 291-296, November.

    More about this item

    Keywords

    inequality; corruption; weak institutions; growth; intentions; dynamic public goods;

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