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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Who Gains From Non-Collusive Corruption?
Organization Unit
Authors
  • Reto Foellmi
  • Manuel Oechslin
Language
  • English
Institution University of Zurich
Series Name Working paper series / Institute for Empirical Research in Economics
Number No. 142
ISSN 1424-0459
Date 2003
Abstract Text We explore the impact of non-collusive corruption on factor rewards and on the wealth distribution. We show that the distributional consequences depend crucially on the degree of capital market imperfections. With perfect capital markets, corruption does not redistribute wealth within the private sector. However, if borrowing is limited, members of the ''middle class'' suffer most since bribery drives them out of the capital market. This in turn makes access to credit easier for relatively wealthy individuals such that a group of them even wins. So, the interest of the latter in overcoming a corrupt regime may be very limited. In the empirical section, we provide cross-country evidence showing that a high level of corruption and a polarization in the income distribution go indeed hand in hand.
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