SpeakerThomas Fujiwara (Princeton University)
Date & Time
LocationThis is a Virtual Event.
Abstract: We study how Brazilian municipal governments affect the market structure of illegal deforestation of the Amazon rainforest. In particular, we focus on the role of the size of legislatures (councils). We exploit a 2004 Supreme Court decision that lowered the number of elected officials in a subset of municipalities to document that smaller council sizes increase deforestation. We then show how this can be explained by theories of whistleblowing (where just one representative of the “good type” can substantially affect outcomes) and a Shleifer-Vishny model where multiple corrupt officials set bribes in a decentralized manner (and thus raise the total bribe that farmers and loggers must pay to carry out illegal deforestation). Consistent with our proposed mechanisms, we also find no effect of council sizes on other observable policies (taxation and spending) and that the effect on deforestation is larger in municipalities with low political accountability, while not affecting other observable policies (e.g., taxation and spending).
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