Inequality, institutions and cooperation

Thomas Markussen, Smriti Sharma, Saurabh Singhal and Finn Tarp

European Economic Review, 2021, vol. 138, issue C

Abstract: We examine whether the relationship between economic inequality and voluntary cooperation is influenced by the quality of local institutions, as proxied by corruption. We use representative data from a large-scale lab-in-the-field public goods experiment with over 1,300 participants across rural Vietnam. Our results show that inequality adversely affects aggregate contributions due to high endowment individuals contributing a significantly smaller share than those with low endowments. This negative effect of inequality on cooperation is stronger in high corruption environments. We find that corruption is associated with pessimistic beliefs about others’ contributions in heterogeneous groups, highlighting the indirect costs of corruption that are understudied in the literature. These findings have implications for public policies aimed at resolving local collective action problems.

Keywords: Inequality; Institutions; Corruption; Public goods; Lab-in-field experiment (search for similar items in EconPapers)
JEL-codes: D73 D90 H41 O12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Inequality, Institutions and Cooperation (2020)
Working Paper: Inequality, institutions and cooperation (2020)
Working Paper: Inequality, institutions and cooperation (2020)
Working Paper: Inequality, institutions, and cooperation (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:138:y:2021:i:c:s001429212100177x

DOI: 10.1016/j.euroecorev.2021.103842

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