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Corruption, Inequality, and Fairness

  • Angeletos, George-Marios
  • Alesina, Alberto

Bigger governments raise the possibilities for corruption; more corruption may in turn raise the support for redistributive policies that intend to correct the inequality and injustice generated by corruption. We formalize these insights in a simple dynamic model. A positive feedback from past to current levels of taxation and corruption arises either when wealth originating in corruption and rent seeking is considered unfair, or when the ability to engage in corruption is unevenly distributed in the population. This feedback introduces persistence in the size of the government and the levels of corruption and inequality. Multiple steady states exist in some cases.

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Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 4553006.

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Date of creation: 2005
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Publication status: Published in Journal of Monetary Economics
Handle: RePEc:hrv:faseco:4553006
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