Rights statement: This is the author’s version of a work that was accepted for publication in European Economic Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Economic Review, 138, 2021 DOI: 10.1016/j.euroecorev.2021.103842
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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
}
TY - JOUR
T1 - Inequality, institutions and cooperation
AU - Markussen, Thomas
AU - Sharma, Smriti
AU - Singhal, Saurabh
AU - Tarp, Finn
N1 - This is the author’s version of a work that was accepted for publication in European Economic Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Economic Review, 138, 2021 DOI: 10.1016/j.euroecorev.2021.103842
PY - 2021/9/1
Y1 - 2021/9/1
N2 - We examine whether the relationship between economic inequality and voluntary cooperation 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 due to high endowment individuals contributing a significantly smaller share than those with low endowments. This negative effect of inequality on cooperation is stronger in high corruption environments. We find that corruption is associated with pessimistic beliefs about others’ contributions in heterogeneous groups, highlighting 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 whether the relationship between economic inequality and voluntary cooperation 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 due to high endowment individuals contributing a significantly smaller share than those with low endowments. This negative effect of inequality on cooperation is stronger in high corruption environments. We find that corruption is associated with pessimistic beliefs about others’ contributions in heterogeneous groups, highlighting 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.
KW - Inequality
KW - Lab-in-field experiment
KW - institutions
KW - corruption
KW - Public goods
U2 - 10.1016/j.euroecorev.2021.103842
DO - 10.1016/j.euroecorev.2021.103842
M3 - Journal article
VL - 138
JO - European Economic Review
JF - European Economic Review
SN - 0014-2921
M1 - 103842
ER -