The Political Resource Curse

69 Pages Posted: 1 Feb 2010

See all articles by Fernanda Brollo

Fernanda Brollo

University of Warwick - Department of Economics

Tommaso Nannicini

Bocconi University - Department of Economics; IZA Institute of Labor Economics

Roberto Perotti

Bocconi University - Department of Economics; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)

Guido Tabellini

Bocconi University - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

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Abstract

The 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 version of the career concerns model of political agency with endogenous entry of political candidates. The evidence refers to municipalities in Brazil, where federal transfers to municipal governments change exogenously according to given population thresholds. We exploit a regression discontinuity design to test the implications of the theory and identify the causal effect of larger federal transfers on political corruption and the observed features of political candidates at the municipal level. In accordance with the predictions of the theory, we find that larger transfers increase political corruption and reduce the quality of candidates for mayor.

Keywords: government spending, corruption, political selection

JEL Classification: D72, D73, H40, H77

Suggested Citation

Brollo, Fernanda and Nannicini, Tommaso and Perotti, Roberto and Tabellini, Guido, The Political Resource Curse. IZA Discussion Paper No. 4706, Available at SSRN: https://ssrn.com/abstract=1545133 or http://dx.doi.org/10.2139/ssrn.1545133

Fernanda Brollo (Contact Author)

University of Warwick - Department of Economics ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Tommaso Nannicini

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Roberto Perotti

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

European University Institute - Economics Department (ECO) ( email )

Villa San Paolo
Via della Piazzuola 43
50133 Florence
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Guido Tabellini

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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