The Injustice of Inequality

44 Pages Posted: 15 Sep 2002

See all articles by Edward L. Glaeser

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

José Scheinkman

Columbia University; Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Andrei Shleifer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2002

Abstract

In many countries, the operation of legal, political and regulatory institutions is subverted by the wealthy and the politically powerful for their own benefit. This subversion takes the form of corruption, intimidation, and other forms of influence. We present a model of such institutional subversion - focusing specifically on courts - and of the effects of inequality in economic and political resources on the magnitude of subversion. We then use the model to analyze the consequences of institutional subversion for the law and order environment in the country, as well as for capital accumulation and growth. We illustrate the model with historical evidence from Gilded Age United States and the transition economies of the 1990s. We also present some cross-country evidence consistent with the basic prediction of the model.

Keywords: Inequality, growth, subversion of institutions

JEL Classification: K40, K42, O17, O40, P51

Suggested Citation

Glaeser, Edward L. and Scheinkman, José and Shleifer, Andrei, The Injustice of Inequality (August 2002). Harvard Institute Research Working Paper No. 1967. Available at SSRN: https://ssrn.com/abstract=321261 or http://dx.doi.org/10.2139/ssrn.321261

Edward L. Glaeser

Harvard University - Department of Economics ( email )

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José Scheinkman

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Andrei Shleifer (Contact Author)

Harvard University - Department of Economics ( email )

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