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Judicial presence and rent extraction

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Abstract

We estimate the effect of state judiciary presence on rent extraction in Brazilian local governments. We measure rents as irregularities related to waste or corruption uncovered by auditors. Our unique dataset at the level of individual inspections allows us to separately examine extensive and intensive margins of rent extraction. The identification strategy is based on an institutional rule of state judiciary branches according to which prosecutors and judges tend to be assigned to the most populous among contiguous counties forming a judiciary district. Our research design exploits this rule by comparing counties that are largest in their district to counties with identical population size from other districts in the same state, where they are not the most populous. IV estimates suggest that state judiciary presence reduces the share of inspections with irregularities related to waste or corruption by about 10 percent or 0.3 standard deviations. In contrast, we find no effect on the intensive margin of rent extraction. Finally, our estimates suggest that judicial presence reduces rent extraction only for first-term mayors.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1143.

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Date of creation: May 2008
Date of revision: Dec 2012
Handle: RePEc:upf:upfgen:1143

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Web page: http://www.econ.upf.edu/

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Keywords: Institutions; Corruption; Rents; Local Governments.;

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Cited by:
  1. Marcos Yamada Nakaguma, 2013. "Choosing the Form of Government: Theory and Evidence from Brazil," Working Papers, Department of Economics 2013_17, University of São Paulo (FEA-USP).
  2. Stephan Litschig & Yves Zamboni, 2011. "Audit risk and rent extraction: Evidence from a randomized evaluation in Brazil," Economics Working Papers 1270, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2013.
  3. Stephan Litschig & Yves Zamboni, 2012. "Audit Risk and Rent Extraction: Evidence from a Randomized Evaluation in Brazil," Working Papers 554, Barcelona Graduate School of Economics.

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