Audit Risk and Rent Extraction: Evidence from a Randomized Evaluation in Brazil
We report results from a randomized policy experiment designed to test whether increased audit risk deters rent extraction in local government procurement and service delivery in Brazil. Our estimates suggest that temporarily increasing annual audit risk by about 20 percentage points reduced the share of audited resources involved in corruption by about 10 percentage points and the proportion of procurement processes with evidence of corruption by about 15 percentage points. The corruption reduction is entirely driven by procurement modalities that restrict competition and afford discretion to procurement officials in their choice of suppliers. 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 eligibility requirements for the conditional cash transfer program Bolsa Família - measured through household visits by auditors. We provide a simple model that rationalizes these findings and discuss implications for audit design.
|Date of creation:||Feb 2016|
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- Claudio Ferraz & Frederico Finan, 2011.
"Electoral Accountability and Corruption: Evidence from the Audits of Local Governments,"
American Economic Review,
American Economic Association, vol. 101(4), pages 1274-1311, June.
- 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.
- 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.
- Oriana Bandiera & Andrea Prat & Tommaso Valletti, 2009. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," American Economic Review, American Economic Association, vol. 99(4), pages 1278-1308, September.
- Andrea Prat & Oriana Bandiera & Tommaso Valletti, 2007. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," Levine's Bibliography 843644000000000100, UCLA Department of Economics.
- Bandiera, Oriana & Prat, Andrea & Valletti, Tommaso, 2008. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," CEPR Discussion Papers 6799, C.E.P.R. Discussion Papers.
- Stephan Litschig & Yves Zamboni, 2015.
"Judicial Presence and Rent Extraction,"
796, Barcelona Graduate School of Economics.
- repec:cup:cbooks:9780521632935 is not listed on IDEAS
- repec:cup:cbooks:9780521659123 is not listed on IDEAS
- 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.
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