The Political Resource Curse
Fernanda Brollo, Tommaso Nannicini, Roberto Perotti, Guido Tabellini
American Economic Review · 2013 · Volume 103 · Issue 5
Abstract
This paper studies the effect of additional government revenues on political corruption and on the quality of politicians, both with theory and data. The theory is based on a political agency model with career concerns and endogenous entry of candidates. The data refer to Brazil, where federal transfers to municipal governments change exogenously at given population thresholds, allowing us to implement a regression discontinuity design. The empirical evidence shows that larger transfers increase observed corruption and reduce the average education of candidates for mayor. These and other more specific empirical results are in line with the predictions of the theory.
Keywords
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior, Bureaucracy, Administrative Processes in Public Organizations, Corruption, Intergovernmental Relations, Federalism, Secession, Formal and Informal Sectors, Shadow Economy, Institutional Arrangements, Economic Development: Urban, Rural, Regional, and Transportation Analysis, Housing, Infrastructure
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