IDEAS home Printed from https://ideas.repec.org/a/spr/soinre/v140y2018i2d10.1007_s11205-017-1781-3.html
   My bibliography  Save this article

Corruption and the ‘Paradox of Redistribution’

Author

Listed:
  • Angélica Sánchez

    (World Bank)

  • Thomas Goda

    (Universidad EAFIT)

Abstract

The existing literature on the determinants of income redistribution has identified a ‘paradox’. Namely, that countries with a high degree of market income inequality redistribute little, which is in disagreement with the median voter theorem. In a first step, this paper outlines several mechanisms that explain why government corruption might be partially responsible for this ‘paradox’. In a second step, different corruption perception indices and an instrumental variable approach are used to provide empirical evidence that indicates a significant negative impact of corruption on redistribution levels for a sample of 148 developing and developed countries. This finding suggests that, next to political and need factors, government corruption explains to some extent the ‘paradox of redistribution’. This is especially true for many developing countries, given that they typically have relatively high degrees of corruption and low levels of redistribution.

Suggested Citation

  • Angélica Sánchez & Thomas Goda, 2018. "Corruption and the ‘Paradox of Redistribution’," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(2), pages 675-693, November.
    • Handle: RePEc:spr:soinre:v:140:y:2018:i:2:d:10.1007_s11205-017-1781-3
    DOI: 10.1007/s11205-017-1781-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11205-017-1781-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11205-017-1781-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Docquier, Frederic & Tarbalouti, Essaid, 2001. "Bribing Votes: A New Explanation to the "Inequality-Redistribution" Puzzle in LDCs," Public Choice, Springer, vol. 108(3-4), pages 259-272, September.
    2. Russell Smyth & Vinod Mishra & Xiaolei Qian, 2010. "Knowing One’s Lot in Life Versus Climbing the Social Ladder: The Formation of Redistributive Preferences in Urban China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 96(2), pages 275-293, April.
    3. Mr. Sanjeev Gupta, 1998. "Does Corruption Affect Income Inequality and Poverty?," IMF Working Papers 1998/076, International Monetary Fund.
    4. Roland Benabou & Efe A. Ok, 2001. "Social Mobility and the Demand for Redistribution: The Poum Hypothesis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 447-487.
    5. Yann Algan & Pierre Cahuc & Marc Sangnier, 2011. "Efficient and Inefficient Welfare States," SciencePo Working papers Main hal-03460495, HAL.
    6. Iversen, Torben & Soskice, David, 2006. "Electoral Institutions and the Politics of Coalitions: Why Some Democracies Redistribute More Than Others," American Political Science Review, Cambridge University Press, vol. 100(2), pages 165-181, May.
    7. Alberto Alesina & George-Marios Angeletos, 2005. "Fairness and Redistribution," American Economic Review, American Economic Association, vol. 95(4), pages 960-980, September.
    8. Davies, Ronald B. & Vadlamannati, Krishna Chaitanya, 2013. "A race to the bottom in labor standards? An empirical investigation," Journal of Development Economics, Elsevier, vol. 103(C), pages 1-14.
    9. Daron Acemoglu & Davide Ticchi & Andrea Vindigni, 2011. "Emergence And Persistence Of Inefficient States," Journal of the European Economic Association, European Economic Association, vol. 9(2), pages 177-208, April.
    10. Malte Luebker, 2014. "Income Inequality, Redistribution, and Poverty: Contrasting Rational Choice and Behavioral Perspectives," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 133-154, March.
    11. Daron Acemoglu & James A. Robinson, 2008. "Persistence of Power, Elites, and Institutions," American Economic Review, American Economic Association, vol. 98(1), pages 267-293, March.
    12. Luca Agnello & Ricardo M. Sousa, 2014. "How Does Fiscal Consolidation Impact on Income Inequality?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 702-726, December.
    13. Philipp Genschel, 2002. "Globalization, Tax Competition, and the Welfare State," Politics & Society, , vol. 30(2), pages 245-275, June.
    14. Yann Algan & Pierre Cahuc & Marc Sangnier, 2016. "Trust and the Welfare State: the Twin Peaks Curve," Economic Journal, Royal Economic Society, vol. 126(593), pages 861-883, June.
    15. Sean Fox & Kristian Hoelscher, 2012. "Political order, development and social violence," Journal of Peace Research, Peace Research Institute Oslo, vol. 49(3), pages 431-444, May.
    16. Ana Corbacho & Vicente Fretes Cibils & Eduardo Lora, 2013. "Recaudar no basta: Los impuestos como instrumento de desarrollo," IDB Publications (Books), Inter-American Development Bank, number 80740, February.
    17. Egger, Peter & Winner, Hannes, 2006. "How Corruption Influences Foreign Direct Investment: A Panel Data Study," Economic Development and Cultural Change, University of Chicago Press, vol. 54(2), pages 459-486, January.
    18. Plümper, Thomas & Troeger, Vera E., 2007. "Efficient Estimation of Time-Invariant and Rarely Changing Variables in Finite Sample Panel Analyses with Unit Fixed Effects," Political Analysis, Cambridge University Press, vol. 15(2), pages 124-139, April.
    19. Sanyal, Amal & Gang, Ira N & Goswami, Omkar, 2000. "Corruption, Tax Evasion and the Laffer Curve," Public Choice, Springer, vol. 105(1-2), pages 61-78, October.
    20. Loukas Balafoutas, 2011. "How much income redistribution? An explanation based on vote-buying and corruption," Public Choice, Springer, vol. 146(1), pages 185-203, January.
    21. Thomas Goda & Alejandro Torres García, 2017. "The Rising Tide of Absolute Global Income Inequality During 1850–2010: Is It Driven by Inequality Within or Between Countries?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(3), pages 1051-1072, February.
    22. Stephen Morris & Stephen Coate, 1999. "Policy Persistence," American Economic Review, American Economic Association, vol. 89(5), pages 1327-1336, December.
    23. Olken, Benjamin A., 2006. "Corruption and the costs of redistribution: Micro evidence from Indonesia," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 853-870, May.
    24. Paolo Mauro, 2004. "The Persistence of Corruption and Slow Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 51(1), pages 1-1.
    25. Breyer, Friedrich & Ursprung, Heinrich W, 1998. "Are the Rich Too Rich to be Expropriated?: Economic Power and the Feasibility of Constitutional Limits to Redistribution," Public Choice, Springer, vol. 94(1-2), pages 135-156, January.
    26. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
    27. Thomas Piketty, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 551-584.
    28. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
    29. repec:idb:brikps:80740 is not listed on IDEAS
    30. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    31. Milanovic, Branko, 2000. "The median-voter hypothesis, income inequality, and income redistribution: an empirical test with the required data," European Journal of Political Economy, Elsevier, vol. 16(3), pages 367-410, September.
    32. Luiz de Mello & Erwin R. Tiongson, 2006. "Income Inequality and Redistributive Government Spending," Public Finance Review, , vol. 34(3), pages 282-305, May.
    33. Eiji Yamamura, 2014. "Trust in government and its effect on preferences for income redistribution and perceived tax burden," Economics of Governance, Springer, vol. 15(1), pages 71-100, February.
    34. Mr. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Working Papers 1998/063, International Monetary Fund.
    35. Frederick Solt, 2016. "The Standardized World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 97(5), pages 1267-1281, November.
    36. Kotera, Go & Okada, Keisuke & Samreth, Sovannroeun, 2012. "Government size, democracy, and corruption: An empirical investigation," Economic Modelling, Elsevier, vol. 29(6), pages 2340-2348.
    37. Romer, Thomas & Rosenthal, Howard, 1979. "The elusive median voter," Journal of Public Economics, Elsevier, vol. 12(2), pages 143-170, October.
    38. Lane Kenworthy & Jonas Pontusson, 2005. "Rising Inequality and the Politics of Redistribution in Affluent Countries," LIS Working papers 400, LIS Cross-National Data Center in Luxembourg.
    39. Dierk Herzer & Philipp Hühne & Peter Nunnenkamp, 2014. "FDI and Income Inequality—Evidence from Latin American Economies," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 778-793, November.
    40. Richard Damania & Per Fredriksson & Muthukumara Mani, 2004. "The Persistence of Corruption and Regulatory Compliance Failures: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 363-390, February.
    41. Marco Pani, 2011. "Hold your nose and vote: corruption and public decisions in a representative democracy," Public Choice, Springer, vol. 148(1), pages 163-196, July.
    42. Beck, Nathaniel & Katz, Jonathan N., 2001. "Throwing Out the Baby with the Bath Water: A Comment on Green, Kim, and Yoon," International Organization, Cambridge University Press, vol. 55(2), pages 487-495, April.
    43. Plümper, Thomas & Troeger, Vera E., 2011. "Fixed-Effects Vector Decomposition: Properties, Reliability, and Instruments," Political Analysis, Cambridge University Press, vol. 19(2), pages 147-164, April.
    44. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-187, June.
    45. Alessandro Pellegata & Vincenzo Memoli, 2016. "Can Corruption Erode Confidence in Political Institutions Among European Countries? Comparing the Effects of Different Measures of Perceived Corruption," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(1), pages 391-412, August.
    46. Goel, Rajeev K & Nelson, Michael A, 1998. "Corruption and Government Size: A Disaggregated Analysis," Public Choice, Springer, vol. 97(1-2), pages 107-120, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hauk, Esther & Oviedo, Mónica & Ramos, Xavier, 2022. "Perception of corruption and public support for redistribution in Latin America," European Journal of Political Economy, Elsevier, vol. 74(C).
    2. Vincent Tawiah & Abdulrasheed Zakari & James Xede, 2023. "Who benefits from corruption; the private individual or the public purse?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2900-2914, July.
    3. M. D. R. Evans & Jonathan Kelley, 2018. "Strong Welfare States Do Not Intensify Public Support for Income Redistribution, but Even Reduce It among the Prosperous: A Multilevel Analysis of Public Opinion in 30 Countries," Societies, MDPI, vol. 8(4), pages 1-52, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andreas Georgiadis & Alan Manning, 2012. "Spend it like Beckham? Inequality and redistribution in the UK, 1983–2004," Public Choice, Springer, vol. 151(3), pages 537-563, June.
    2. Cervellati, Matteo & Esteban, Joan & Kranich, Laurence, 2010. "Work values, endogenous sentiments redistribution," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 612-627, October.
    3. Malte Luebker, 2014. "Income Inequality, Redistribution, and Poverty: Contrasting Rational Choice and Behavioral Perspectives," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 133-154, March.
    4. Matteo Cervellati & Joan-Maria Esteban & Laurence Kranich, 2010. "Work Values, Endogenous Sentiments and Redistribution," Working Papers 434, Barcelona School of Economics.
    5. Joan Esteban & Laurence Kranich, 2003. "The Social Contracts with Endogenous Sentiments," Working Papers 71, Barcelona School of Economics.
    6. Luna Bellani & Heinrich Ursprung, 2016. "The Political Economy of Redistribution Policy," CESifo Working Paper Series 6189, CESifo.
    7. Pfarr, Christian, 2012. "Meltzer-Richard and social mobility hypothesis: revisiting the income-redistribution nexus using German choice data," MPRA Paper 43325, University Library of Munich, Germany.
    8. Choi, Gwangeun, 2019. "Revisiting the redistribution hypothesis with perceived inequality and redistributive preferences," European Journal of Political Economy, Elsevier, vol. 58(C), pages 220-244.
    9. Gründler, Klaus & Köllner, Sebastian, 2020. "Culture, diversity, and the welfare state," Journal of Comparative Economics, Elsevier, vol. 48(4), pages 913-932.
    10. Corneo, Giacomo & Neher, Frank, 2015. "Democratic redistribution and rule of the majority," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 96-109.
    11. repec:hal:spmain:info:hdl:2441/13pk3v50kg9i9q98f7erie10rb is not listed on IDEAS
    12. Bernasconi, Michele, 2006. "Redistributive taxation in democracies: Evidence on people's satisfaction," European Journal of Political Economy, Elsevier, vol. 22(4), pages 809-837, December.
    13. repec:spo:wpmain:info:hdl:2441/13pk3v50kg9i9q98f7erie10rb is not listed on IDEAS
    14. Gilles Le Garrec, 2011. "Redistribution and the cultural transmission of the taste for fairness," Documents de Travail de l'OFCE 2011-24, Observatoire Francais des Conjonctures Economiques (OFCE).
    15. Fabio Sabatini & Marco Ventura & Eiji Yamamura & Luca Zamparelli, 2020. "Fairness and the Unselfish Demand for Redistribution by Taxpayers and Welfare Recipients," Southern Economic Journal, John Wiley & Sons, vol. 86(3), pages 971-988, January.
    16. Gilles Le Garrec, 2011. "Redistribution and the cultural transmission of the taste for fairness," SciencePo Working papers Main hal-01069524, HAL.
    17. Eiji Yamamura, 2021. "Information of income position and its impact on perceived tax burden and preference for redistribution: An Internet Survey Experiment," Papers 2106.11537, arXiv.org.
    18. Gilles Le Garrec, 2018. "Fairness, social norms and the cultural demand for redistribution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 50(2), pages 191-212, February.
    19. Gilles Le Garrec, 2014. "Fairness, socialization and the cultural deman for redistribution," Documents de Travail de l'OFCE 2014-20, Observatoire Francais des Conjonctures Economiques (OFCE).
    20. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09hacc56d41 is not listed on IDEAS
    21. Kang, Sung Jin & Seo, Hwan-Joo, 2023. "Validity of the Meltzer and Richard hypothesis under captured democracy and policy regime hypotheses," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1732-1749.
    22. Jaejoon Woo, 2023. "The long-run determinants of redistribution: evidence from a panel of 47 countries in 1967–2014," Empirical Economics, Springer, vol. 64(4), pages 1811-1860, April.
    23. Le Garrec, Gilles, 2013. "Guilt aversion and redistributive politics: A moral intuitionist approach," Economics Discussion Papers 2013-53, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    Keywords

    Redistribution; Corruption; Income inequality;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:soinre:v:140:y:2018:i:2:d:10.1007_s11205-017-1781-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.