Does Corruption Affect Income Inequality and Poverty?
Studies of the consequences of corruption have mainly focused on economic efficiency. This paper illustrates that corruption can also have distributional consequences. Corruption increases income inequality and poverty through lower economic growth; biased tax systems favoring the rich and well-connected; poor targeting of social programs; use of wealth by the well-to-do to lobby government for favorable policies that perpetuate inequality in asset ownership; lower social spending; unequal access to education; and a higher risk in investment decisions of the poor.