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The relationship between corruption and income inequality in U.S. states: evidence from a panel cointegration and error correction model

Abstract

We investigate the causality between corruption and income inequality within a multivariate framework using a panel data set of all 50 U.S. states over the period 1980 to 2004. The heterogeneous panel cointegration test by Pedroni (Oxf. Bull. Econ. Stat. 61:653–670, 1999; Econom. Theory 20:597–627, 2004) indicates that in the long run corruption and the unemployment rate have a positive and statistically significant impact on income inequality while a negative impact is found for real personal income per capita, education, and unionization rate. The Granger-causality results associated with a panel vector error correction model indicate both short-run and long-run bidirectional causality between corruption and income inequality.

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Correspondence to Oguzhan C. Dincer.

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Apergis, N., Dincer, O.C. & Payne, J.E. The relationship between corruption and income inequality in U.S. states: evidence from a panel cointegration and error correction model. Public Choice 145, 125–135 (2010). https://doi.org/10.1007/s11127-009-9557-1

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  • Corruption
  • Income inequality
  • Panel unit root and cointegration tests
  • Granger-causality