Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/170838 
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers No. 10854
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper studies the relationship between people's beliefs about the quality of their institutions, as measured by corruption perceptions, and preferences for redistribution in Latin America. Our empirical study is guided by a theoretical model which introduces taxes into Foellmi and Oechslin's (2007) general equilibrium model of non-collusive corruption. In this model perceived corruption influences people's preferences for redistribution through two channels. On the one hand it undermines trust in government, which reduces people's support for redistribution. On the other hand, more corruption decreases own wealth relative to average wealth of below-average-wealth individuals leading to a higher demand for redistribution. Thus, the effect of perceived corruption on redistribution cannot be signed a priori. Our novel empirical findings for Latin America suggest that perceiving corruption in the public sector increases people's support for redistribution. Although the positive channel dominates in the data, we also and evidence for the negative channel from corruption to demand for redistribution via reduced trust.
Subjects: 
preference for redistribution
perception of corruption
political trust
bribery
Latin America
JEL: 
D31
D63
H1
H2
P16
Document Type: 
Working Paper

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