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Playing Whac-A-Mole in the Fight against Corruption: Evidence from Random Audits in Brazil

Author

Listed:
  • Maximiliano Lauletta

    (Department of Economics, University of California, Berkeley)

  • Martín Rossi

    (Department of Economics, Universidad de San Andres)

  • Christian Ruzzier

    (Department of Economics, Universidad de San Andres)

Abstract
Audits can reduce corruption, but corrupt officials may be able to substitute to alternate forms of corruption when the anticorruption policy controls only certain types of corruption. By exploiting the random assignment of municipalities to a large, successful, audit program in Brazil, we document unintended (and undesirable) consequences of such selective anticorruption monitoring: audited municipalities employ more labor in water provision, and this translates into a more inefficient service. We also provide additional evidence consistent with the idea that local officials may be using their discretion in hiring to substitute between different forms of corruption.

Suggested Citation

  • Maximiliano Lauletta & Martín Rossi & Christian Ruzzier, 2021. "Playing Whac-A-Mole in the Fight against Corruption: Evidence from Random Audits in Brazil," Working Papers 157, Universidad de San Andres, Departamento de Economia, revised Sep 2021.
    • Handle: RePEc:sad:wpaper:157
    as

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    File URL: https://webacademicos.udesa.edu.ar/pub/econ/doc157.pdf
    File Function: First version, August 2021.
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    corruption; audits; efficiency; development; employment; water & sanitation;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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