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Inequality and guard labor, or prohibition and guard labor?

Author

Listed:
  • Geloso, Vincent
  • Kufenko, Vadim

Abstract

In this paper, we consider whether or not inequality forces society to expend more resources on supervision which imposes an extra cost to doing business. Some argue that since inequality deteriorates social capital, there is a greater need for supervisory labor which is a costly burden to bear. We propose an alternative (but not mutually exclusive) explanation. We argue that the war on drugs leads to institutional decay and lower levels of trust which, in turn, force private actors to deploy resources to supervise workers and protect themselves. Our explanation complements the argument regarding the link between inequality and guard labor.

Suggested Citation

  • Geloso, Vincent & Kufenko, Vadim, 2017. "Inequality and guard labor, or prohibition and guard labor?," Hohenheim Discussion Papers in Business, Economics and Social Sciences 06-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
  • Handle: RePEc:zbw:hohdps:062017
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    References listed on IDEAS

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    1. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," Review of Economic Studies, Oxford University Press, vol. 71(4), pages 1001-1026.
    2. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
    3. Niclas Berggren & Henrik Jordahl, 2006. "Free to Trust: Economic Freedom and Social Capital," Kyklos, Wiley Blackwell, vol. 59(2), pages 141-169, May.
    4. Miron, Jeffrey A, 1999. "Violence and the U.S. Prohibitions of Drug and Alcohol," American Law and Economics Review, Oxford University Press, vol. 1(1-2), pages 78-114, Fall.
    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. Stringham, Edward Peter, 2015. "Private Governance: Creating Order in Economic and Social Life," OUP Catalogue, Oxford University Press, number 9780199365166.
    7. repec:cup:apsrev:v:105:y:2011:i:04:p:702-716_00 is not listed on IDEAS
    8. J. B. Rosser-Jr. & M. Rosser., 2009. "A Critique of the New Comparative Economics," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 8.
    9. Oliver Volckart & Antje Mangels, 1999. "Are the Roots of the Modern Lex Mercatoria Really Medieval?," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 427-450, January.
    10. Bowles,Samuel, 2012. "The New Economics of Inequality and Redistribution," Cambridge Books, Cambridge University Press, number 9781107601604, October.
    11. Bowles,Samuel, 2012. "The New Economics of Inequality and Redistribution," Cambridge Books, Cambridge University Press, number 9781107014039, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Economic Growth; Inequality; Drugs; Guard Labor;

    JEL classification:

    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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