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Self-serving dictators and economic growth

[journal article]

Haile, Daniel; Sadrieh, Abdolkarim; Verbon, Harrie A.A.

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-263136

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Abstract We study the effect of fair institutions on growth. In our model, individuals are endowed with unequal entitlements to the economy's output. They can free-ride or cooperate. Cooperation is individually costly, but increases aggregate output and growth. Experimentally, we observe significantly less cooperation, when dictators chose high instead of low inequality. This effect is not observed when the degree of inequality is chosen randomly. Simple cross-country regressions provide basic macroeconomic support for interaction effects between the degree and the genesis of inequality. We conclude that economies granting equal opportunities are less likely to suffer retarded growth due to free-riding than economies with self-serving dictators.
Classification Methods and Techniques of Data Collection and Data Analysis, Statistical Methods, Computer Methods; National Economy
Free Keywords Inequality; Fair procedures; Corruption; Dynamic public goods game; Institutional design
Document language English
Publication Year 2008
Page/Pages p. 573-586
Journal Journal of Economic Behavior & Organization, 67 (2008) 3-4
DOI http://dx.doi.org/10.1016/j.jebo.2007.09.004
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)