We would like to thank an associate editor and an anonymous referee of this journal for comments. We are also grateful to Jens Andvig, Abhijit Banerjee, Kaushik Basu, Maitreesh Ghatak, Dilip Mookherjee, Ashok Parikh, Gurleen Popli, and seminar participants at CMI, Bergen, and UEA for comments and discussions. Financial assistance under the Poverty, Inequality, and Development (PID) program at Cornell University is acknowledged by the second author.
Does Inequality Foster Corruption?
Version of Record online: 13 MAR 2013
© 2013 Wiley Periodicals, Inc.
Journal of Public Economic Theory
Volume 15, Issue 4, pages 602–619, August 2013
How to Cite
DUTTA, I. and MISHRA, A. (2013), Does Inequality Foster Corruption?. Journal of Public Economic Theory, 15: 602–619. doi: 10.1111/jpet.12027
- Issue online: 10 JUN 2013
- Version of Record online: 13 MAR 2013
- Accepted manuscript online: 7 JAN 2013 04:39AM EST
- Manuscript Accepted: 13 JUN 2011
- Manuscript Received: 20 MAR 2010
In this paper, we investigate how inequality affects corruption in the presence of an imperfect credit market. We favor an explanation based on a multimarket framework where corruption in one market (or sector) arises because of imperfections exacerbated by inequality in related markets. We demonstrate that even when an individual's ability to pay bribes and benefit from engaging in corruption are not affected by wealth level, greater (wealth) inequality will lead to an increase in corruption.