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Inequality, Good Governance and Endemic Corruption

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  • Epstein, Gil S.
  • Gang, Ira N.

Abstract

Can a society suffering contests between rich and poor achieve good governance in the face of endemic corruption? We examine a stylized poor state with weak institutions in which a “culture of evasion” damages state authority. Many evade tax payments, limiting the state’s economic development capability. In the face of extensive corruption, it is challenging for the state to establish and implement policies reflecting good governance; for example, a government that is accountable and transparent, efficient and effective, and follows the rule of law. The rich and poor possess different views on what is the appropriate level of enforcing proper payments of taxes due. The government needs to design an effective tax administration policy that minimizes corruption and is sensitive to the present and future needs of society. To do this it must understand what drives such widespread corruption.

Suggested Citation

  • Epstein, Gil S. & Gang, Ira N., 2017. "Inequality, Good Governance and Endemic Corruption," GLO Discussion Paper Series 142, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:142
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    References listed on IDEAS

    as
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    2. Myles, Gareth D. & Naylor, Robin A., 1996. "A model of tax evasion with group conformity and social customs," European Journal of Political Economy, Elsevier, vol. 12(1), pages 49-66, April.
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    13. James Alm, 2014. "Tax evasion, labor market effects, and income distribution," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-91, October.
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    More about this item

    Keywords

    corruption; tax administration; governance; rent-seeking;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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