Power-induced corruption and income inequality: An empirical analysis in China

Abstract

This paper studies how corruption and growth affect income distribution by using time series data from 1978 to 2010 in China. The analysis reveals that corruption significantly increases the degree of income inequality, while the economic growth is helpful to decrease the degree of income inequality. So, the key to decreasing income inequality is to prevent and punish corruption, reduce the monopoly of the administrative powers of economic and social resources, reduce the administrative powers of market intervention, gradually push forward the reform of political system and strengthen the democratic supervision of administrative power. In the meantime, the government should continue to deepen the market-oriented reforms, accelerate economic development and improve people’s income share of national income to narrow the income gap.

Keywords

• public officials
• power corruption
• economic growth
• income inequality