Externalities in Politicians’ Malfeasance
Speaker
Gustavo Bobonis, University of TorontoDate & time
Location
This is a Virtual Event.
Seminar is open to U-M students and faculty.
Abstract: We study spillover effects of corruption, i.e., whether and how public information regarding politicians’ malfeasance in other jurisdictions can affect corruption and rent seeking in the home jurisdiction. Using longitudinal and spatially linked data of anti-corruption audits in all municipal governments in Puerto Rico during the period 1987-2014, we measure levels of reported corruption and re-election patterns across municipalities with varying levels of exposure to timely audits – -those that are disseminated before elections – in neighboring jurisdictions. Exposure to timely audits in half of adjacent jurisdictions leads to an increase in reported corruption levels by 11 percent; but this is not associated with a change in the incumbent mayors’ electoral accountability. In order to explore the potential channels that help rationalize these negative externalities, we develop a political agency model with inter-community spillovers that aims to capture an important mechanism for corruption spillovers: social norms regarding the appropriateness of corruption among local politicians. (with Anke Kessler and Xin Zhao)
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