Corruption and inequality

There are several research about the effect of institutional features on economic performance. It is generally emphasized that economic growth depends on institutions. However, it is mentioned that institutions affect other economic indicators significantly. Inequality is influenced by institutions through various channels and is largely shaped by institutions. The rise in inequality in recent years has led to an increase in the number and the importance of research in this field. Inequality, which has the power to influence large parts of the society and has devastating social and economic effects, is a global issue. The manipulation of institutions by different interest groups who has political power exacerbates inequality. The deterioration in institutions leads to the failure to implement egalitarian policies and serves the elites' search for rent. Wealth transfers from the public to the elites becomes easier and inequality increases. Accordingly, corruption has been conceptualized as the deterioration in institutions and suboptimal functioning or inability to function. The relationship between institutional features and inequality has been measured. In previous studies that aimed to establish a relationship between two variables, the direction of the causality relationship was discussed in both ways. In some studies, inequality was taken as the dependent variable, while in others corruption was taken. There are also studies claiming that there is a bidirectional causality relationship between the variables. In addition, there are studies that determine the direction of the relationship as positive and negative. Studies on inequality often focus on developed countries, ignoring Islamic countries where inequality is remarkably high. For this reason, the effect of corruption on income inequality in 14 selected Islamic countries was examined in the study. Panel Data analysis was carried out with the data between 2003 and 2011. As a result of the analysis, it was determined that there is a significant positive relationship between corruption and inequality. A 1% improvement in the Corruption Perception Score of countries reduces the Gini coefficient by 0.25%.