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Audit Risk and Rent Extraction: Evidence from a Randomized Evaluation in Brazil

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  • Yves Zamboni
  • Stephan Litschig
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    Abstract

    We report results from a randomized policy experiment designed to test whether increased audit risk deters rent extraction in local public procurement and service delivery in Brazil. Our estimates suggest that temporarily increasing annual audit risk by about 20 percentage points reduced the proportion of procurement processes with evidence of corruption by about 15 percentage points and the share of audited resources involved in corruption by about 10 percentage points. We show that these results are invariant to alternative corruption codings that have been used in prior literature. In contrast, we find no evidence that increased audit risk affected the quality of publicly provided preventive and primary health care services - measured based on user satisfaction surveys - or compliance with national regulations of the conditional cash transfer program Bolsa Família

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    Bibliographic Info

    Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 554.

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    Date of creation: Aug 2014
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    Handle: RePEc:bge:wpaper:554

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    Keywords: government audit; corruption; rents;

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    1. Ritva Reinikka & Jakob Svensson, 2004. "Local Capture: Evidence From a Central Government Transfer Program in Uganda," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(2), pages 678-704, May.
    2. Miriam A. Golden & Lucio Picci, 2005. "Proposal For A New Measure Of Corruption, Illustrated With Italian Data," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 17, pages 37-75, 03.
    3. Stephan Litschig & Yves Zamboni, 2008. "Judicial presence and rent extraction," Economics Working Papers 1143, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2012.
    4. Andrea Prat & Oriana Bandiera & Tommaso Valletti, 2007. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," Levine's Bibliography 843644000000000100, UCLA Department of Economics.
    5. Claudio Ferraz & Frederico Finan, 2009. "Electoral Accountability and Corruption: Evidence from the Audits of Local Governments," NBER Working Papers 14937, National Bureau of Economic Research, Inc.
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