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Perception of corruption and public support for redistribution in Latin America / Esther Hauk (IAE-CSIC and Barcelona GSE, Campus UAB), Mónica Oviedo (Universitat Autònoma de Barcelona and EQUALITAS), Xavier Ramos (Universitat Autònoma de Barcelona, IZA and EQUALITAS) ; IZA Institute of Labor Economics
VerfasserHauk, Esther ; Oviedo, Mónica ; Ramos Morilla, Xavier
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, June 2017
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SerieDiscussion paper ; no. 10854
URNurn:nbn:de:hbz:5:2-134883 
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dp10854.pdf [0.49 mb]Perception of corruption and public support for redistribution in Latin America
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This paper studies the relationship between peoples 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 Oechslins (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.