Perception of Corruption and Public Support for Redistribution in Latin America

47 Pages Posted: 10 Jul 2017

See all articles by Esther Hauk

Esther Hauk

Instituto de Análisis Económic (IAE) Barcelona

Mónica Oviedo

Autonomous University of Barcelona

Xavier Ramos

Universitat Autònoma de Barcelona; Institute for the Study of Labor (IZA)

Abstract

This paper studies the relationship between people's beliefs about the quality of their institutions, as measured by corruption perceptions, and preferences for redistribution in Latin America. Our empirical study is guided by a theoretical model which introduces taxes into Foellmi and Oechslin's (2007) general equilibrium model of non-collusive corruption. In this model perceived corruption influences people's preferences for redistribution through two channels. On the one hand it undermines trust in government, which reduces people's support for redistribution. On the other hand, more corruption decreases own wealth relative to average wealth of below-average-wealth individuals leading to a higher demand for redistribution. Thus, the effect of perceived corruption on redistribution cannot be signed a priori. Our novel empirical findings for Latin America suggest that perceiving corruption in the public sector increases people's support for redistribution. Although the positive channel dominates in the data, we also and evidence for the negative channel from corruption to demand for redistribution via reduced trust.

Keywords: preference for redistribution, perception of corruption, political trust, bribery, Latin America

JEL Classification: D31, D63, H1, H2, P16

Suggested Citation

Hauk, Esther and Oviedo, Mónica and Ramos, Xavier, Perception of Corruption and Public Support for Redistribution in Latin America. IZA Discussion Paper No. 10854. Available at SSRN: https://ssrn.com/abstract=2998963

Esther Hauk (Contact Author)

Instituto de Análisis Económic (IAE) Barcelona ( email )

Barcelona, Bellaterra 08193
Spain

Mónica Oviedo

Autonomous University of Barcelona ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

Xavier Ramos

Universitat Autònoma de Barcelona ( email )

Dept. Economia Aplicada
Campus UAB
Bellaterra, Barcelona 08193
Spain

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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