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Corruption and re-election: how much can politicians steal before getting punished?

Vuk Vukovic ()

Journal of Comparative Economics, 2020, vol. 48, issue 1, 124-143

Abstract: Can corruption be used to improve re-election chances of politicians in office? What is the optimal level of corruption for doing so? In this paper I use suspicious patterns of public procurement allocations in local government as a proxy measurement of corruption, based on combining quantitative and qualitative evidence on corrupt practices in local government. I then tie suspicious procurements to re-election probabilities of mayors in Croatian cities and municipalities from 2009 to 2017, and find that due to a rent-extracting relationship formed between firms and political elites, local politicians can engage in potential corruption and still win elections. There is an optimal level of suspicious procurements for which politicians maximize their re-election chances. When a mayor surpasses the cut-off level of around 20% of suspiciously allocated funds from public procurement his or her probability of re-election starts to decline, while he or she loses office for at least one half of all procurements allocated suspiciously. In order to address potential endogeneity issues I apply a fuzzy regression discontinuity design based on population thresholds that determine the size of the local council, where the intensity of the treatment (potential corruption) increases with increasing council size. The results overall confirm the hypothesized nonlinear relationship between corruption and re-election.

Keywords: Corruption; Re-election; Suspicious procurement; Local government (search for similar items in EconPapers)
JEL-codes: D72 D73 H41 D78 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jce.2019.09.002

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