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Corruption and the ‘Paradox of Redistribution’

Angélica Sánchez and Thomas Goda ()
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Angélica Sánchez: World Bank

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2018, vol. 140, issue 2, 675-693

Abstract: Abstract The existing literature on the determinants of income redistribution has identified a ‘paradox’. Namely, that countries with a high degree of market income inequality redistribute little, which is in disagreement with the median voter theorem. In a first step, this paper outlines several mechanisms that explain why government corruption might be partially responsible for this ‘paradox’. In a second step, different corruption perception indices and an instrumental variable approach are used to provide empirical evidence that indicates a significant negative impact of corruption on redistribution levels for a sample of 148 developing and developed countries. This finding suggests that, next to political and need factors, government corruption explains to some extent the ‘paradox of redistribution’. This is especially true for many developing countries, given that they typically have relatively high degrees of corruption and low levels of redistribution.

Keywords: Redistribution; Corruption; Income inequality (search for similar items in EconPapers)
JEL-codes: H23 D31 D73 (search for similar items in EconPapers)
Date: 2018
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