Template-Type: ReDIF-Paper 1.0
Author-Name: Stephen Dobson
Author-Name: Carlyn Ramlogan
Title: Is there a trade-off between income inequality and corruption? Evidence from Latin America
Abstract: Conventional economic thinking says corruption and income inequality are positively related. In contrast, this study finds that lower corruption is associated with higher income inequality.
The finding of a trade-off is not unexpected in the context of Latin America, for two reasons.
First, Latin America has a large informal sector and corruption-reducing polices impose a
transaction cost on this sector whose members are among the poorest. Second, redistributive
measures, promoted by corrupt elements in society, are often cut back with institutional
reform and this serves to worsen inequality. The results imply that corruption-reducing
policies aimed at lowering inequality may be misguided.
File-URL: http://www.ntu.ac.uk/__data/assets/pdf_file/0024/311577/trade-off-between-income-inequality-corruption.pdf
File-Format: Application/pdf
File-Function: First version, 2009
Creation-Date: 2009-06
Classification-JEL: O15, O54.
Keywords:corruption, Latin America, income inequality, instrumental variables, panel data.
Handle: RePEc:nbs:wpaper:2009/4