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Democracy, Property Rights, Income Equality, and Corruption


  • Bin Dong
  • Benno Torgler


This paper presents theoretical and empirical evidence on the nexus between corruption and democracy. We establish a political economy model where the effect of democracy on corruption is conditional on income distribution and property rights protection. Our empirical analysis with cross-national panel data provides evidence that is consistent with the theoretical prediction. Moreover, the effect of democratization on corruption depends on the protection of property rights and income equality which shows that corruption is a nonlinear function of these variables. The results indicate that democracy will work better as a control of corruption if the property right system works and there is a low level of income inequality. On the other hand if property rights are not secured and there is strong income inequality, democracy may even lead to an increase of corruption. In addition, property rights protection and the mitigation of income inequality contribute in a strong manner to the reduction of corruption.

Suggested Citation

  • Bin Dong & Benno Torgler, 2010. "Democracy, Property Rights, Income Equality, and Corruption," CREMA Working Paper Series 2010-23, Center for Research in Economics, Management and the Arts (CREMA).
  • Handle: RePEc:cra:wpaper:2010-23

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    Cited by:

    1. Dimant, Eugen, 2014. "The Antecedents and Effects of Corruption - A Reassessment of Current (Empirical) Findings," MPRA Paper 60947, University Library of Munich, Germany.
    2. Ivar Kolstad & Arne Wiig, 2011. "Does democracy reduce corruption?," CMI Working Papers 4, CMI (Chr. Michelsen Institute), Bergen, Norway.

    More about this item


    Corruption; Democracy; Income inequality; Property rights;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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