41 Pages Posted: 15 Feb 2006
Date Written: May 1998
This paper demonstrates that high and rising corruption increases income inequality and poverty by reducing economic growth, the progressivity of the tax system, the level and effectiveness of social spending, and the formation of human capital, and by perpetuating an unequal distribution of asset ownership and unequal access to education. These findings hold for countries with different growth experiences, at different stages of development, and using various indices of corruption. An important implication of these results is that policies that reduce corruption will also lower income inequality and poverty.
Keywords: Corruption, income inequality, poverty
JEL Classification: D73, D31, I32
Suggested Citation: Suggested Citation
Gupta, Sanjeev and Davoodi, Hamid R. and Alonso-Terme, Rosa, Does Corruption Affect Income Inequality and Poverty? (May 1998). IMF Working Paper, Vol. , pp. 1-41, 1998. Available at SSRN: https://ssrn.com/abstract=882360