Inequality, institutions and cooperation
Publikation: Working paper › Forskning
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Inequality, institutions and cooperation. / Markussen, Thomas; Sharma, Smriti; Singhal, Saurabh; Tarp, Finn.
2020.Publikation: Working paper › Forskning
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TY - UNPB
T1 - Inequality, institutions and cooperation
AU - Markussen, Thomas
AU - Sharma, Smriti
AU - Singhal, Saurabh
AU - Tarp, Finn
PY - 2020
Y1 - 2020
N2 - We examine the effects of randomly introduced economic inequality on voluntary co-operation and whether this relationship is influenced by the quality of local institutions, as proxied by corruption. We use representative data from a large-scale lab-in-the-field public goods experiment with over 1,300 participants across rural Vietnam. Our results show that inequality adversely affects aggregate contributions, and this is on account of high endowment individuals contributing a significantly smaller share than those with low endowments. This negative effect of inequality on cooperation is exacerbated in high corruption environments. We nd that corruption leads to more pessimistic beliefs about others' contributions in heterogeneous groups, and this is an important mechanism explaining our results. In doing so, we highlight the indirect costs of corruption that are understudied in the literature. These findings have implications for public policies aimed at resolving local collective action problems.
AB - We examine the effects of randomly introduced economic inequality on voluntary co-operation and whether this relationship is influenced by the quality of local institutions, as proxied by corruption. We use representative data from a large-scale lab-in-the-field public goods experiment with over 1,300 participants across rural Vietnam. Our results show that inequality adversely affects aggregate contributions, and this is on account of high endowment individuals contributing a significantly smaller share than those with low endowments. This negative effect of inequality on cooperation is exacerbated in high corruption environments. We nd that corruption leads to more pessimistic beliefs about others' contributions in heterogeneous groups, and this is an important mechanism explaining our results. In doing so, we highlight the indirect costs of corruption that are understudied in the literature. These findings have implications for public policies aimed at resolving local collective action problems.
M3 - Working paper
T3 - Economics Working Paper Series
BT - Inequality, institutions and cooperation
ER -
ID: 255740605