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Weathering Corruption

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  • Peter T. Leeson
  • Russell S. Sobel

Abstract

Could bad weather be responsible for U.S. corruption? Natural disasters create resource windfalls in the states they strike by triggering federally provided natural-disaster relief. By increasing the benefit of fraudulent appropriation and creating new opportunities for such theft, disaster-relief windfalls may also increase corruption. We investigate this hypothesis by exploring the effect of disaster relief provided by the Federal Emergency Management Agency (FEMA) on public corruption. The results support our hypothesis. Each additional $100 per capita in FEMA relief increases the average state's corruption by nearly 102 percent. Our findings suggest notoriously corrupt regions of the United States, such as the Gulf Coast, are in part notoriously corrupt because natural disasters frequently strike them. They attract more disaster relief, which makes them more corrupt. (c) 2008 by The University of Chicago. All rights reserved.

Suggested Citation

  • Peter T. Leeson & Russell S. Sobel, 2008. "Weathering Corruption," Journal of Law and Economics, University of Chicago Press, vol. 51(4), pages 667-681, November.
  • Handle: RePEc:ucp:jlawec:v:51:y:2008:i:4:p:667-681
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    References listed on IDEAS

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    1. Jakob Svensson, 2003. "Who Must Pay Bribes and How Much? Evidence from a Cross Section of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 207-230.
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    Cited by:

    1. repec:kap:revaec:v:30:y:2017:i:4:d:10.1007_s11138-016-0369-5 is not listed on IDEAS
    2. Jeffrey Milyo & Adriana Cordis, 2013. "Don't Blame the Weather: Federal Natural Disaster Aid and Public Corruption," Working Papers 1321, Department of Economics, University of Missouri.
    3. Monica Escaleras & Charles Register, 2012. "Fiscal decentralization and natural hazard risks," Public Choice, Springer, vol. 151(1), pages 165-183, April.
    4. repec:kap:pubcho:v:171:y:2017:i:3:d:10.1007_s11127-017-0440-1 is not listed on IDEAS
    5. Jamie Bologna & Amanda Ross, 2015. "Corruption and entrepreneurship: evidence from Brazilian municipalities," Public Choice, Springer, vol. 165(1), pages 59-77, October.
    6. Spyros Skouras & Nicos Christodoulakis, 2011. "Electoral Misgovernance Cycles: Evidence from wildfires and tax evasion in Greece and elsewhere," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 47, Hellenic Observatory, LSE.
    7. Eiji Yamamura, 2014. "Impact of natural disaster on public sector corruption," Public Choice, Springer, vol. 161(3), pages 385-405, December.
    8. Yoshito Takasaki, 2013. "Do natural disasters beget fraud victimization?: Unrealized coping through labor migration among the poor," Tsukuba Economics Working Papers 2013-002, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
    9. Emily Chamlee-Wright & Virgil Henry Storr, 2010. "Introduction: Uncertainty and Discovery in a Post-Disaster Context," Chapters,in: The Political Economy of Hurricane Katrina and Community Rebound, chapter 1 Edward Elgar Publishing.
    10. Coyne, Christopher J., 2011. "Constitutions and crisis," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 351-357.
    11. Adam Martin, 2010. "Uncertainty in the Post-Katrina Big Easy," Chapters,in: The Political Economy of Hurricane Katrina and Community Rebound, chapter 2 Edward Elgar Publishing.
    12. repec:bla:ecinqu:v:55:y:2017:i:1:p:137-159 is not listed on IDEAS
    13. Emily Chamlee-Wright & Virgil Storr, 2010. "Expectations of government’s response to disaster," Public Choice, Springer, vol. 144(1), pages 253-274, July.
    14. Spyros Skouras & Nicos Christodoulakis, 2014. "Electoral misgovernance cycles: evidence from wildfires and tax evasion in Greece," Public Choice, Springer, vol. 159(3), pages 533-559, June.
    15. Clarke,Daniel Jonathan & Wren-Lewis,Liam, 2016. "Solving commitment problems in disaster risk finance," Policy Research Working Paper Series 7720, The World Bank.
    16. Dong, Bin & Torgler, Benno, 2013. "Causes of corruption: Evidence from China," China Economic Review, Elsevier, vol. 26(C), pages 152-169.
    17. Grooms, Katherine K., 2015. "Enforcing the Clean Water Act: The effect of state-level corruption on compliance," Journal of Environmental Economics and Management, Elsevier, vol. 73(C), pages 50-78.
    18. Matthias Busse & Steffen Gröning, 2013. "The resource curse revisited: governance and natural resources," Public Choice, Springer, vol. 154(1), pages 1-20, January.
    19. Emily Skarbek, 2014. "The Chicago Fire of 1871: a bottom-up approach to disaster relief," Public Choice, Springer, vol. 160(1), pages 155-180, July.
    20. Nabamita Dutta & Russell Sobel, 2016. "Does corruption ever help entrepreneurship?," Small Business Economics, Springer, vol. 47(1), pages 179-199, June.
    21. Adriana Cordis, 2009. "Judicial checks on corruption in the United States," Economics of Governance, Springer, vol. 10(4), pages 375-401, November.
    22. repec:eee:epplan:v:64:y:2017:i:c:p:57-68 is not listed on IDEAS
    23. Emily Chamlee-Wright & Virgil Storr, 2011. "Social capital, lobbying and community-based interest groups," Public Choice, Springer, vol. 149(1), pages 167-185, October.
    24. Cordis, Adriana S. & Warren, Patrick L., 2014. "Sunshine as disinfectant: The effect of state Freedom of Information Act laws on public corruption," Journal of Public Economics, Elsevier, vol. 115(C), pages 18-36.

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