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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. Enrico Perotti & Marcel Vorage, 2010. "Bank Ownership and Financial Stability," Tinbergen Institute Discussion Papers 10-022/2, Tinbergen Institute, revised 11 Sep 2010.
  2. 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).
  3. Alexander Whalley, 2010. "Elected Versus Appointed Policymakers: Evidence from City Treasurers," NBER Working Papers 15643, National Bureau of Economic Research, Inc.
  4. Fernanda Brollo, 2008. "Who Is Punishing Corrupt Politicians – Voters or the Central Government? Evidence from the Brazilian Anti-Corruption Program," Working Papers 336, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  5. 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).
  6. Alain de Janvry & Frederico Finan & Elisabeth Sadoulet, 2010. "Local Electoral Incentives and Decentralized Program Performance," NBER Working Papers 16635, National Bureau of Economic Research, Inc.
  7. Oriana Bandiera & Andrea Prat & Tommaso Valletti, 2008. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," CEIS Research Paper 115, Tor Vergata University, CEIS, revised 14 Jul 2008.
  8. Svaleryd, Helena & Vlachos, Jonas, 2009. "Political rents in a non-corrupt democracy," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 355-372, April.
  9. 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).
  10. Arvate, Paulo Roberto, 2013. "Electoral Competition and Local Government Responsiveness in Brazil," World Development, Elsevier, vol. 43(C), pages 67-83.
  11. repec:dgr:uvatin:2010022 is not listed on IDEAS

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