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Author Finan, Frederico Shimizu
Title Political patronage, corruption, and local development
book jacket
Descript 154 p
Note Source: Dissertation Abstracts International, Volume: 67-08, Section: A, page: 3084
Advisers: Alain de Janvry; Elisabeth Sadoulet
Thesis (Ph.D.)--University of California, Berkeley, 2006
This dissertation examines - in the context of Brazil - the incentive structure that politicians have to extract; rent by exploiting informational asymmetries, on to target resources in a socially inefficient manner
The first chapter investigates the extent to which the provisioning of information enables voters to hold corrupt politicians accountable. Specifically, it exploits a natural experiment provided by a recent anti-corruption program, which randomly audits municipal expenditures of federally-transferred funds, to estimate the impact of the disclosure of local government corruption practices on the re-election success of incumbent mayors in municipal elections. The results show that the disclosure of information on the audits had a significant impact on the reelection rates of mayors found to be corrupt. In particular, for a one standard deviation increase in reported corruption, the audit policy reduced the incumbent's likelihood of reelection by 25 percent. This effect is also more pronounced in municipalities where radio stations are present and when higher levels of corruption are revealed, thus highlighting the value of information and the role of the media in reducing informational asymmetries in the political process
The second chapter tests whether re-election incentives affect the level of rent extraction by incumbent politicians. The existence of term limits in Brazil's municipal elections provides an operational proxy for re-election incentives, and the results reveal that there is significantly more corruption in municipalities where mayors are in their second and final term, when compared to similar municipalities where mayors are in their first-term. In particular, in municipalities with second-term mayors; the level of diversion of resources increases by an average of US$85,650, and the incidence of irregularities is 31 percent higher. This difference between first and second-term mayors is further exacerbated in municipalities where the costs of rent-extraction are lower (municipalities without media and judicial presence) and where the density of pivotal voters is higher. Moreover, first-term mayors, while less corrupt, suffer from a greater tendency toward less effective administration which suggests that there may exist a trade-off between the level of corruption and administrative quality in public good provisioning
The third chapter investigates how political incentives affect the allocation of public investments using data from Brazil's Chamber of Deputies. Federal deputies can submit budgetary amendments for public works in their state's municipalities. Our results show that federal deputies reward municipalities based on political support. A ten percentage point increase in vote shares received in the previous election implies an expected increase of US$34,630 in public works for a municipality during the electoral cycle. Political motivations also influence the type of public work the municipalities receives. Because these public goods vary in their degree of exclusion, politicians prefer to allocate public goods that are less excludable to municipalities where they received more political support. With the allocation of public investments manipulated to meet political objectives, we examine the impact of these public works on local welfare. We show that these public investments, while increasing average per capita income, also increased local income inequality
School code: 0028
Host Item Dissertation Abstracts International 67-08A
Subject Economics, General
Political Science, General
Alt Author University of California, Berkeley
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