Rent-Seeking and Criminal Politicians: Evidence from Mining Booms

Abstract

We study how natural resource rents affect the selection and behavior of holders of public office. Using global price shocks to thirty-one minerals and nationwide geological and political data from India, we show that local mineral rent shocks cause the election of criminal politicians. We also find a moral hazard effect: politicians commit more crimes and accumulate greater wealth when mineral prices rise during their term in office. These politicians have direct influence over mining operations but no access to fiscal windfalls from mining; we thus isolate the direct political impacts of mining sector operations.

JEL Classification: O13, D72, P16, Q33