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Turning a blind eye: a Regression Discontinuity Design Analysis of Party-Based Support for Corruption in Brazil

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  • Louis Graham

Abstract

While corruption has long been conceptualised using the Principal-Agent framework, recent academic literature has proposed that in many countries, corruption is used as a political tool by 'unprincipled principals'. Using data from a corruption audit programme in Brazil and an RDD design, I study whether a state governor and municipal mayor being of the same party increases corruption linked to the mayor. I find evidence that when the governor's party wins the municipal mayoral election, corruption declines by 60-80% of the mean corruption level, and by 100-120% for larger municipalities. This is consistent with a model in which governors use corruption to gain control over mayors through potential blackmail, and in which governors want to prevent their party being associated with corruption to protect their re-election chances. I find further evidence consistent with the first argument. Much weaker evidence is found consistent with the second.

Suggested Citation

  • Louis Graham, 2016. "Turning a blind eye: a Regression Discontinuity Design Analysis of Party-Based Support for Corruption in Brazil," CSAE Working Paper Series 2016-18, Centre for the Study of African Economies, University of Oxford.
  • Handle: RePEc:csa:wpaper:2016-18
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    File URL: http://www.csae.ox.ac.uk/materials/papers/csae-wps-2016-18.pdf
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    Keywords

    Corruption; Political Networks; Regression Discontinuity Design;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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