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Electoral Accountability and Corruption in Local Governments: Evidence from Audit Reports

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Author Info

  • Ferraz, Claudio

    ()
    (Pontifical Catholic University of Rio de Janeiro (PUC-Rio))

  • Finan, Frederico S.

    ()
    (University of California, Berkeley)

Abstract

Political corruption is a concern of many modern democracies. It weakens democratic institutions, restricts public services, and lowers productivity undermining economic development. Yet despite its importance, our understanding of what determines corruption is limited. This paper uses a novel dataset of political corruption in local governments, constructed from reports of an anti-corruption program in Brazil, to test whether the possibility of re-election affects the level of rents extracted by incumbent politicians. Exploiting variation induced by the existence of a term limit, we find that in municipalities where mayors are in their final term, there is significantly more corruption compared to similar municipalities where mayors can still be re-elected. In particular, the share of resources misappropriated is, on average, 57 percent larger in municipalities with lame-duck mayors. The findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician’s corrupt behavior.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2843.

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Length: 48 pages
Date of creation: Jun 2007
Date of revision:
Publication status: published in: American Economic Review, 2011, 101 (4), 1274-1311
Handle: RePEc:iza:izadps:dp2843

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Keywords: local governments; corruption; re-election; accountability;

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References

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Citations

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Cited by:
  1. Svaleryd, Helena & Vlachos, Jonas, 2007. "Political Rents in a Non-Corrupt Democracy," Working Paper Series, Research Institute of Industrial Economics 698, Research Institute of Industrial Economics, revised 26 Mar 2008.
  2. Ferraz, Claudio & Finan, Frederico S., 2008. "Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance," IZA Discussion Papers 3411, Institute for the Study of Labor (IZA).
  3. repec:dgr:uvatin:2010022 is not listed on IDEAS
  4. 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).
  5. Fernanda Brollo, 2008. "Who Is Punishing Corrupt Politicians - Voters or the Central Government? Evidence from the Brazilian Anti-Corruption Program," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series, Boston University - Department of Economics dp-168, Boston University - Department of Economics.
  6. Arvate, Paulo Roberto, 2013. "Electoral Competition and Local Government Responsiveness in Brazil," World Development, Elsevier, Elsevier, vol. 43(C), pages 67-83.
  7. Alexander Whalley, 2010. "Elected Versus Appointed Policymakers: Evidence from City Treasurers," NBER Working Papers 15643, National Bureau of Economic Research, Inc.
  8. Oriana Bandiera & Andrea Prat & Tommaso Valletti, 2008. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," CEIS Research Paper, Tor Vergata University, CEIS 115, Tor Vergata University, CEIS, revised 14 Jul 2008.
  9. de Janvry, Alain & Finan, Frederico S. & Sadoulet, Elisabeth, 2010. "Local Electoral Incentives and Decentralized Program Performance," IZA Discussion Papers 5382, Institute for the Study of Labor (IZA).
  10. Ferraz, Claudio & Finan, Frederico S., 2007. "Exposing Corrupt Politicians: The Effects of Brazil’s Publicly Released Audits on Electoral Outcomes," IZA Discussion Papers 2836, Institute for the Study of Labor (IZA).
  11. Enrico Perotti & Marcel Vorage, 2010. "Bank Ownership and Financial Stability," Tinbergen Institute Discussion Papers 10-022/2, Tinbergen Institute, revised 11 Sep 2010.

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