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Corruption, Inequality and Fairness

26 Pages Posted: 8 May 2005  

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

George-Marios Angeletos

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

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Date Written: April 29, 2005

Abstract

Bigger governments raise the possibilities for corruption; more corruption may in turn raise the support for redistributive policies that intend to correct the inequality and injustice generated by corruption. We formalize these insights in a simple dynamic model. A positive feedback from past to current levels of taxation and corruption arises either when wealth originating in corruption and rent seeking is considered unfair, or when the ability to engage in corruption is unevenly distributed in the population. This feedback introduces persistence in the size of the government and the levels of corruption and inequality. Multiple steady states exist in some cases.

Keywords: Corruption, rent seeking, inequality, fairness, redistribution, political economy

JEL Classification: D31, E62, H2, P16

Suggested Citation

Alesina, Alberto F. and Angeletos, George-Marios, Corruption, Inequality and Fairness (April 29, 2005). MIT Department of Economics Working Paper No. 05-16; Harvard Institute of Economic Research Discussion Paper No. 2070. Available at SSRN: https://ssrn.com/abstract=720211 or http://dx.doi.org/10.2139/ssrn.720211

Alberto F. Alesina (Contact Author)

Harvard University - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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George-Marios Angeletos

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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