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Corruption, Income Inequality, and Poverty in the United States

38 Pages Posted: 11 Sep 2008  

Oguzhan C. Dincer

Illinois State University - Department of Economics; Harvard University - Edmond J. Safra Center for Ethics

Burak Gunalp

Hacettepe University

Date Written: July 11, 2008

Abstract

In this study we analyze the effects of corruption on income inequality and poverty. Our analysis advances the existing literature in four ways. First, instead of using corruption indices assembled by various investment risk services, we use an objective measure of corruption: the number of public officials convicted in a state for crimes related to corruption. Second, we use all commonly used inequality and poverty measures including various Atkinson indexes, Gini index, standard deviation of the logarithms, relative mean deviation, coefficient of variation, and the poverty rate defined by the U.S. Census Bureau. Third, we minimize the problems which are likely to arise due to data incomparability by examining the differences in income inequality, and poverty across U.S. states. Finally, we exploit both time series and cross sectional variation in the data. We find robust evidence that an increase in corruption increases income inequality and poverty.

Keywords: Corruption, Income Inequality, Poverty

JEL Classification: D31, D73, I32

Suggested Citation

Dincer, Oguzhan C. and Gunalp, Burak, Corruption, Income Inequality, and Poverty in the United States (July 11, 2008). FEEM Working Paper No. 54.2008. Available at SSRN: https://ssrn.com/abstract=1158446 or http://dx.doi.org/10.2139/ssrn.1158446

Oguzhan Dincer (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
Suite 520N
Cambridge, MA 02138
United States

Burak Gunalp

Hacettepe University ( email )

Department of Economics
06532 Beytepe
Ankara
Turkey
+903122978650/32 (Phone)
+903122992003 (Fax)

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