Political power and wealth distribution: how anti-corruption reforms reshape inequality

Abstract

This study examines the causal effects of anti-corruption reforms on wealth concentration. Using data from the World Inequality Database, the World Governance Indicators, and V-Dem across more than 150 countries, I employ a staggered difference-in-differences approach to identify the impact of sustained drops in measured corruption on wealth distribution. Sustained anti-corruption reforms significantly reduce wealth concentration at the top while increasing shares at the bottom of the distribution. Ten years after implementation, the top 1% wealth share falls by approximately 2 percentage points and the top 10% share by 1.5 percentage points, while the bottom 50% share rises by 0.4 percentage points and the bottom 20% share by 0.15 percentage points. These effects emerge gradually, becoming statistically significant within four years of reforms and persisting throughout the observation period. The results are robust across alternative estimators, alternative corruption indicators, and specifications that control for lagged dependent variables, national income, the top 1% income share, political violence, and inflation. A synthetic control analysis of Georgia illustrates how reforms disrupt elite patronage networks, while the subsequent policy reversal caused distributional gains to stagnate. The findings extend the political economy literature by showing that elite-disrupting mechanisms dominate offsetting concerns about informal redistribution and that reforms reshape wealth distribution through expanded access to financial services and property rights rather than through direct fiscal transfers.