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Why is corruption less harmful to income inequality in Latin America?

Dobson, Stephen; Ramlogan-Dobson, Carlyn


Stephen Dobson


Conventional wisdom says corruption is bad for income inequality. But recent research on Latin America finds a trade-off between corruption and inequality and suggests this is due to the large informal sector in the region. Using data on a large sample of countries we find that the informal sector impacts the link between corruption and inequality. In particular, the marginal impact of corruption becomes negative once the informal sector becomes large. This is true in Latin America and more generally. Corruption reducing policies should be accompanied by measures that help displaced informal sector workers. © 2012 Elsevier Ltd.


Dobson, S., & Ramlogan-Dobson, C. (2012). Why is corruption less harmful to income inequality in Latin America?. World Development, 40(8), 1534-1545.

Journal Article Type Article
Acceptance Date Jan 30, 2012
Online Publication Date May 12, 2012
Publication Date 2012-08
Deposit Date Nov 13, 2014
Journal World Development
Print ISSN 0305-750X
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 40
Issue 8
Pages 1534-1545
Keywords Corruption; Latin America; Income inequality; Informal sector; Marginal impact
Public URL
Publisher URL