Авлига болон хүнд суртлын орлого хуваарилалтанд үзүүлэх нөлөө

Abstract

This paper is concerned with analysing the role of red tape and corruption in determining inequality through their effects on occupational choice and investment opportunities. There are two potential sources of imperfection in the economy - an imperfection
in financial markets due to incomplete enforcement of contracts by lenders, and an imperfection in governance due to possible rentseeking (or bribe-taking) by bureaucrats. The former of these frictions imply that the opportunity to borrow depends on the size of an agent’s initial wealth: individuals with wealth above some critical level are granted loans, whilst individuals with wealth below this level are denied loans. The latter friction arises because of an opportunity for bureaucrats to ask for bribes in exchange for allowing individuals to circumvent red tape. It is shown how the critical level of wealth, and therefore the extent of inequality, is affected differently by the existence of red tape or the existence of bribes. The analysis is then extended to consider the case in which red tape and bribe payments are determined together – that is, when bureaucrats, themselves, set the level of red tape in order to maximise their bribe income. Implications are drawn for the effect of such behaviour on inequality and income distribution.