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The relationship between corruption and income inequality has been widely studied, but there is no consensus on whether corruption increases or reduces inequality. We conduct an extreme bounds analysis (EBA) to test the robustness of the explanatory variables proposed in the literature. Using a sample of up to 150 countries, with data mostly going back to 1980, we find that corruption does not appear to have a clear positive effect on inequality or may even reduce it. Also, contrary to what is sometimes suggested in the literature, the results do not support an inverted U‐shaped effect of corruption on income distribution. A more important role in explaining income distribution seems to be played by the level of financial development, the old‐age dependency ratio, the unemployment rate, the capital stock to GDP ratio and the population growth rate. These are often found to be significant drivers of inequality, regardless of the set of control variables and the definition of corruption used. [ABSTRACT FROM AUTHOR]

Corruption has been shown to affect a variety of observed human capital inputs, such as health status, school enrollment, and student dropout rates. However, to the best of our knowledge, the question of how corruption affects unobserved skills has received little attention. This study investigates the effect of corruption on unobserved human capital, measured from the earnings of immigrants, using the U.S. census data for the period 1980–2000. In the human capital model built in the paper, corruption enters the budget constraint of an individual as a cost of the accumulation of unobservable skills. Using data on immigrants and the theoretical model motivating an empirical analysis, the study reveals how corruption impacts the stock of human capital across countries. According to the prediction deriving from the empirical analysis, corruption has a negative effect on the stocks of human capital. The counterfactual findings using the calibrated model suggest that the elimination of corruption increases aggregate output by 18–21% on average. [ABSTRACT FROM AUTHOR]

There is evidence in the literature that corruption lowers the level of investment and the productivity of capital stock in an economy. This paper extends the literature by presenting evidence that investment allocation decisions are affected in a significant way by corruption. The most commonly used measure of the efficiency of overall investment in an economy is the incremental capital output ratio (ICOR), measured by the ratio of gross investment to the change in the gross domestic product. The inverse of the ICOR measures the productivity of investment in an economy. When the known explanatory factors for inter-country variation in the ICOR are taken into account, the incidence of corruption has a statistically significant negative effect on the efficiency of investment for a panel of 90–140 countries during 1995–2004. The strength of this effect increases with the incidence of corruption. The econometric model used is robust to unobserved and time-invariant country fixed effects, feedbacks from current stochastic shocks to subsequent values of the determinants of investment efficiency, and the persistence of efficiency. [ABSTRACT FROM AUTHOR]

This paper proposes a new method for constructing R&D capital stocks developed to avoid the common assumption of a constant rate of knowledge depreciation, which implies wear and tear of knowledge. The method models the development of R&D capital stocks as a process of creative destruction linking the depreciation of knowledge to the emergence of new knowledge. A first empirical assessment of the new method – measuring the influence of R&D capital stocks on production in the manufacturing sectors of 12 OECD countries – produces plausible and robust results. [ABSTRACT FROM AUTHOR]

While there is strong support for corruption reducing investment, there exists only scant empirical evidence for the likely adverse impact on productivity. This study measures productivity by the ratio of GDP to the capital stock, the latter being determined by a perpetual inventory method. A reduction of Tanzania's level of corruption to that of the United Kingdom would increase productivity by 10 percent, leading to a 20 percent increase in GDR Decomposing this impact reveals that bureaucratic quality is the crucial determinant, but a country's tradition of law and order is irrelevant for productivity. [ABSTRACT FROM AUTHOR]

The paper studies the impact on international capital movements of the accelerated tax depreciation scheme introduced in the U.S.A. under the REAGAN administration. It is argued on theoretical grounds that, contrary to most other potential tax reforms, this depreciation scheme calls for a substantial restructuring in the world-wide capital stock in favor of the U.S. Moreover, it is demonstrated that the scheme may reduce severe sectoral changes within national economies. Countries that do not take countervailing actions against the U.S policy are likely to experience a rise in their labour intensive industries at the expense of losing their capital intensive industries. A tentative estimate based on stylized economic facts indicates the necessity of a capital import into the U.S. of at least 7% of the OECD capital stock, which means that even with a doubling of the 1983 U.S. current account deficit of $40 billion more than a decade would have to pass in order for the required structural changes to be accomplished. [ABSTRACT FROM AUTHOR]

Discusses the relationship among output flows, discount rate and internal rate of return of inter-temporal production projects. Description of the Truncation Theorem; Problem of the value of capital stock; Composition of the stock of capital goods.

SUMMARY This paper touches on three models of growth, viz: the F el'dman (Soviet) model, the H arrod-D omar model and the M ahalanobis (Indian) model. Of these three, the ancestry of the first is maintained in respect of both its contents and historical sequence. It is argued that the Soviet model is superior to the other two models because it recognizes the significance of a number of factors, viz: (a) the pattern of income distribution, (b) increase in the effective utilization of the existing capital stock, (c) distinction between degrees of effective utilization of the old and the new capital stocks, and lastly, (d) consideration of the rate of growth in terms of capital capacity as well as in terms of the absorption of a growing labour supply. In other respects, the model runs more or less parallel to the H arrod-D omar and M ahalanobis models. Some striking similarities between the Soviet and Indian models exist in spite of the differences in economic and political conditions of the two countries. These are: (a) the Marxian setting of two departments of a closed economy, (b) the aim of achieving a high rate of investment by expanding the capital goods sector and (c) a relative neglect of propensity to save as a crucial variable in the process of growth. The affinity between the Indian and the Soviet models is so strong that the former seems to answer the Soviet rather than the Indian conditions. [ABSTRACT FROM AUTHOR]

Focuses on the correlation between migration and welfare benefit levels. Social division of labor; Importance of labor in capital stock; Association of labor with constant capital.