Public Choice

, Volume 145, Issue 1–2, pp 125–135 | Cite as

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

  • Nicholas Apergis
  • Oguzhan C. DincerEmail author
  • James E. Payne


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.

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


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  • Nicholas Apergis
    • 1
  • Oguzhan C. Dincer
    • 2
    Email author
  • James E. Payne
    • 3
  1. 1.Department of Banking and Financial ManagementUniversity of PiraeusPiraeusGreece
  2. 2.Department of EconomicsIllinois State UniversityNormalUSA
  3. 3.College of Arts and SciencesIllinois State UniversityNormalUSA

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