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

  • Stephan Litschig
  • Yves Zamboni

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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File URL: http://www.econ.upf.edu/docs/papers/downloads/1270.pdf
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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
Contact details of provider: Web page: http://www.econ.upf.edu/

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  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
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