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Abstract

The paper studies the effect of additional government revenues on political corruption and on the quality of politicians, both with theory and data. The theory is based on a version of the career concerns model of political agency with endogenous entry of political candidates. The evidence refers to municipalities in Brazil, where federal transfers to municipal governments change exogenously according to given population thresholds. We exploit a regression discontinuity design to test the implications of the theory and identify the causal effect of larger federal transfers on political corruption and the observed features of political candidates at the municipal level. In accordance with the predictions of the theory, we find that larger transfers increase political corruption and reduce the quality of candidates for mayor.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7672.

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Date of creation: Jan 2010
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Handle: RePEc:cpr:ceprdp:7672

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Related research

Keywords: corruption; government spending; political selection;

Other versions of this item:

Find related papers by JEL classification:

• D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
• D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
• H40 - Public Economics - - Publicly Provided Goods - - - General
• H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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Cited by:

1. Thomas Markussen & Jean-Robert Tyran, 2010. "Serving the Public Interest," Discussion Papers 10-11, University of Copenhagen. Department of Economics.
   
   • Thomas Markussen & Jean-Robert Tyran, 2010. "Serving the Public Interest," NRN working papers 2010-21, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
2. Benjamin A. Olken & Rohini Pande, 2011. "Corruption in Developing Countries," NBER Working Papers 17398, National Bureau of Economic Research, Inc.
3. Guglielmo Barone & Gaia Narciso, 2011. "The effect of mafia on public transfers," Trinity Economics Papers tep2111, Trinity College Dublin, Department of Economics.
   
   • Guglielmo Barone & Gaia Narciso, 2012. "The Effect Of Mafia On Public Transfers," The Institute for International Integration Studies Discussion Paper Series iiisdp398, IIIS.
4. Stephan Litschig & Kevin Morrison, 2012. "Government Spending and Re-election: Quasi-Experimental Evidence from Brazilian Municipalities," Working Papers 515, Barcelona Graduate School of Economics.
5. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo Group Munich.
   
   • Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
6. Gustavo J Bobonis & Luis R Cámara Fuertes & Rainer Schwabe, 2011. "The Dynamic Effects of Information on Political Corruption: Theory and Evidence from Puerto Rico," Working Papers tecipa-428, University of Toronto, Department of Economics.
   
   • Gustavo J. Bobonis & Luis R. Cámara Fuertes & Rainer Schwabe, 2012. "The Dynamic Effects of Information on Political Corruption: Theory and Evidence from Puerto Rico," Working Papers 2012-14, Banco de México.
7. Fernando Aragon & Juan Pablo Rud, 2012. "Mining, Pollution and Agricultural Productivity: Evidence from Ghana," Discussion Papers dp12-08, Department of Economics, Simon Fraser University.
8. Stefano Gagliarducci & Tommaso Nannicini, 2013. "Do Better Paid Politicians Perform Better? Disentangling Incentives From Selection," Journal of the European Economic Association, European Economic Association, vol. 11(2), pages 369-398, 04.
   
   • Gagliarducci, Stefano & Nannicini, Tommaso, 2009. "Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection," IZA Discussion Papers 4400, Institute for the Study of Labor (IZA).
   • Stefano Gagliarducci & Tommaso Nannicini, 2010. "Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection," CEIS Research Paper 162, Tor Vergata University, CEIS, revised 28 May 2010.
   • Stefano Gagliarducci & Tommaso Nannicini, 2008. "Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection," Working Papers 346, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
9. Stephan Litschig, 2011. "Financing Local Development: Quasi-Experimental Evidence from Municipalities in Brazil, 1980-1991," Working Papers 510, Barcelona Graduate School of Economics.
10. Loayza, Norman & Mier y Teran, Alfredo & Rigolini, Jamele, 2013. "Poverty, Inequality, and the Local Natural Resource Curse," IZA Discussion Papers 7226, Institute for the Study of Labor (IZA).
    
    • Loayza, Norman & Mier y Teran, Alfredo & Rigolini, Jamele, 2013. "Poverty, inequality, and the local natural resource curse," Policy Research Working Paper Series 6366, The World Bank.
11. Julien Labonne, 2012. "The local electoral impacts of conditional cash transfers Evidence from a field experiment," Economics Series Working Papers WPS/2012-09, University of Oxford, Department of Economics.
12. Marta Curto-Grau (Universitat de Barcelona) & Albert Sole-Olle (Universitat de Barcelona) & Pilar Sorribas-Navarro(Universitat de Barcelona), 2012. "Partisan targeting of inter-governmental transfers & state interference in local elections: evidence from Spain," Working Papers in Economics 288, Universitat de Barcelona. Espai de Recerca en Economia.
    
    • Marta Curto-Grau & Albert Solé-Ollé & Pilar Sorribas-Navarro, 2012. "Partisan targeting of inter-governmental transfers & state interference in local elections: evidence from Spain," Working Papers 2012/31, Institut d'Economia de Barcelona (IEB).
13. Paulo Arvate & Braz Camargo & Carlos Pereira, 2010. "Fiscal Responsibility and the Supply of Public Goods," Working Papers 06-2010, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
14. Busse, Matthias & Gröning, Steffen, 2011. "The resource curse revisited: Governance and natural resources," HWWI Research Papers 106, Hamburg Institute of International Economics (HWWI).
    
    • Matthias Busse & Steffen Gröning, 2013. "The resource curse revisited: governance and natural resources," Public Choice, Springer, vol. 154(1), pages 1-20, January.
15. Julien Labonne, 2012. "The local electoral impacts of conditional cash transfers: Evidence from a field experiment," CSAE Working Paper Series 2012-09, Centre for the Study of African Economies, University of Oxford.

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