Judicial Presence and Rent Extraction

Stephan Litschig and Yves Zamboni
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Stephan Litschig: National Graduate Institute for Policy Studies, Tokyo, Japan
Yves Zamboni: Universidade Federal de Pernambuco

No 19-20, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: This paper estimates the effect of state judiciary presence on rent extraction in Brazilian local governments. We measure rents as irregularities related to waste or corruption uncovered by central government auditors. The identification strategy is based on an institutional rule of state judiciary branches according to which prosecutors and judges tend to be assigned to the most populous among contiguous counties forming a judiciary district. Our research design exploits this rule by comparing counties that are largest in their district to counties with identical population size from other districts in the same state where they are not the most populous. Instrumental variable estimates suggest that state judiciary presence reduces the share of inspections with irregularities related to waste or corruption by about 10 percent. The effect is concentrated among first-term mayors, suggesting that judicial presence operates through an increased probability of detection and prosecution rather than an increased probability of conviction, which should discipline second-term mayors as well.

Pages: 56 pages
Date: 2019-10
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Persistent link: https://EconPapers.repec.org/RePEc:ngi:dpaper:19-20

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