NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Corruption, Inequality and Fairness

Alberto Alesina, George-Marios Angeletos

NBER Working Paper No. 11399
Issued in June 2005
NBER Program(s):   PE   POL

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.

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Document Object Identifier (DOI): 10.3386/w11399

Published: Alesina, Alberto and George-Marios Angeletos. "Corruption, Inequality, And Fairness," Journal of Monetary Economics, 2005, v52(7,Oct), 1227-1244.

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