Inequality, institutions and cooperation

Markussen, Thomas and Sharma, Smriti and Singhal, Saurabh and Tarp, Finn (2020) Inequality, institutions and cooperation. Working Paper. Lancaster University, Department of Economics, Lancaster.

[thumbnail of LancasterWP2020_023]
Text (LancasterWP2020_023)
LancasterWP2020_023.pdf - Published Version

Download (2MB)


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.

Item Type:
Monograph (Working Paper)
?? inequalityinstitutionscorruptionpublic goodslab-in-field experimenth41d73d90o12 ??
ID Code:
Deposited By:
Deposited On:
02 Nov 2020 15:00
Last Modified:
15 Jul 2024 08:00