Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76594
Authors: 
Haile, Daniel
Sadrieh, Abdolkarim
Verbon, Harrie A. A
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper 1105
Abstract: 
A new line of theoretical and empirical literature emphasizes the pivotal role of fair institutions for growth. We present a model, a laboratory experiment, and a simple cross-country regression supporting this view. We model an economy with an unequal distribution of property rights, in which individuals can free-ride or cooperate. Experimentally we observe a dramatic drop in cooperation (and growth), when inequality is increased by a selfserving dictator. No such effect is observed when the inequality is increased by a fair procedure. Our regression analysis provides basic macroeconomic support for the adverse growth effect of the interaction between the degree and the genesis of inequality. We conclude that economies giving equal opportunities to all are not likely to suffer retarded growth due to inequality in the way economies with self-serving dictators will.
Subjects: 
inequality
corruption
weak institutions
growth
intentions
dynamic public goods
Document Type: 
Working Paper

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