Bo RothsteinBlavatnik School of Government

andNuffield College

University of Oxford

Inequality and Corruption

Regional difference in QoG in Europe Blue/black = high QoG – Yellow/green=low QoG

Level of Democracy and Human Development Index

Quality of Government and Human Development

What works against inequality

• Answer: Public provision of basic resources through universal social policies

• Health care, education, public transportation, support to families, etc.

• Universal social policies create more redistribution than selective ones

• However, such policies will only be supported if quality of institutions is high

Trust in institutions and social solidarity: A huge leap of faith?

• Can your trust that the state be able to fairly collect enough fees/taxes?

• Can you trust that the state will handle the money in a responsible way or will policies be drowned in corruption etc.

• Can you trust that the state will be able to deliver?

• Can you trust that the state will deliver in an acceptable way?

• Can you trust that the state will be able to handle abuse or overuse?

Trust and institutions• Selective social policies often create

suspicion regarding fairness in implementation

• Means testing leads to negative stereotyping

• Universal social policies are based on equal treatment and thus less bureaucratic discretion and intrusion

• Produces a sense of equality of opportunity and institutional fairness

Empirical results: Country level

• The effect of left cabinets on the level of welfare state effort is dependent on the level of quality in government

• A country with the best possible level of QoG will spend 21 percentage more of its GDP on the welfare state compared to a country with the lowest possible level of QoG

Empirical results: Individual level

• A person who is in favour of more socio-economic equality, but who lives in a country where (s)he perceives there is low quality of government, prefers lower taxes and less social spending

• The similar type of person who lives in a country where s(he) perceives the quality of government institutions to be OK, is willing to pay higher taxes for more social spending

Corruption and Inequality: The take home lessons

• Corruption does not only work as an extra tax for poor people

• Corruption will also make it much harder to get broad support for universal social policies

• Corruption and low quality of government is thus probably ”the enemy number one” for alleviating poverty and inequality