Inequality and guard labor, or prohibition and guard labor?

Vincent Geloso and Vadim Kufenko

No 06-2017, Hohenheim Discussion Papers in Business, Economics and Social Sciences from University of Hohenheim, Faculty of Business, Economics and Social Sciences

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.

Keywords: Economic Growth; Inequality; Drugs; Guard Labor (search for similar items in EconPapers)
JEL-codes: E31 N11 N21 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hohdps:062017

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