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Audit risk and rent extraction: Evidence from a randomized evaluation in Brazil

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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 irregular local procurement processes by about 17 percentage points. This reduction was driven entirely by irregularities involving mismanagement or corruption. 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 Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1270.

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Date of creation: Apr 2011
Date of revision: Jun 2013
Handle: RePEc:upf:upfgen:1270

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

Related research

Keywords: Corruption; Rents; Local Governments; Law Enforcement;

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References

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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, vol. 119(2), pages 678-704, May.
  2. 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.
  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. Miriam A. Golden & Lucio Picci, 2005. "Proposal For A New Measure Of Corruption, Illustrated With Italian Data," Economics and Politics, Wiley Blackwell, vol. 17, pages 37-75, 03.
  5. 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.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How to reduce public procurement waste
    by Economic Logician in Economic Logic on 2012-09-05 14:49:00
  2. Random audits to reduce misappropriation of public resources
    by Economic Logician in Economic Logic on 2012-09-06 14:22:00
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Cited by:
  1. Karthik Muralidharan & Jishnu Das & Alaka Holla & Aakash Mohpal, 2014. "The Fiscal Cost of Weak Governance: Evidence from Teacher Absence in India," NBER Working Papers 20299, National Bureau of Economic Research, Inc.

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