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Perception of Corruption and Public Support for Redistribution in Latin America

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Listed:
  • Hauk, Esther

    () (IAE Barcelona (CSIC))

  • Oviedo, Mónica

    () (Universitat Autònoma de Barcelona)

  • Ramos, Xavier

    () (Universitat Autònoma de Barcelona)

Abstract

This paper studies the relationship between people's beliefs about the quality of their institutions, as measured by corruption perceptions, and preferences for redistribution in Latin America. Our empirical study is guided by a theoretical model which introduces taxes into Foellmi and Oechslin's (2007) general equilibrium model of non-collusive corruption. In this model perceived corruption influences people's preferences for redistribution through two channels. On the one hand it undermines trust in government, which reduces people's support for redistribution. On the other hand, more corruption decreases own wealth relative to average wealth of below-average-wealth individuals leading to a higher demand for redistribution. Thus, the effect of perceived corruption on redistribution cannot be signed a priori. Our novel empirical findings for Latin America suggest that perceiving corruption in the public sector increases people's support for redistribution. Although the positive channel dominates in the data, we also and evidence for the negative channel from corruption to demand for redistribution via reduced trust.

Suggested Citation

  • Hauk, Esther & Oviedo, Mónica & Ramos, Xavier, 2017. "Perception of Corruption and Public Support for Redistribution in Latin America," IZA Discussion Papers 10854, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10854
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    References listed on IDEAS

    as
    1. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June.
    2. Alesina, Alberto & Angeletos, George-Marios, 2005. "Corruption, inequality, and fairness," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1227-1244, October.
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    More about this item

    Keywords

    preference for redistribution; perception of corruption; political trust; bribery; Latin America;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H1 - Public Economics - - Structure and Scope of Government
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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