Illegal drugs and public corruption: Crack based evidence from California

Alessandro Flamini (), Babak Jahanshahi and Kamiar Mohaddes

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Do illegal drugs foster public corruption? To estimate the causal effect of drugs on public corruption in California, we adopt the synthetic control method and exploit the fact that crack cocaine markets emerged asynchronously across the United States. We focus on California because crack arrived here in 1981, before reaching any other state. Our results show that public corruption more than tripled in California in the first three years following the arrival of crack cocaine. We argue that this resulted from the particular characteristics of illegal drugs: a large trade-off between profits and law enforcement, due to a cheap technology and rigid demand. Such a trade-off fosters a convergence of interests between criminals and corrupted public officials resulting in a positive causal impact of illegal drugs on corruption.

Keywords: Public corruption; crack cocaine; synthetic control; illegal drugs; and law enforcement (search for similar items in EconPapers)
JEL-codes: C12 D73 K42 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2018-09
New Economics Papers: this item is included in nep-law
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https://cama.crawford.anu.edu.au/sites/default/fil ... shadi_mohaddes_0.pdf (application/pdf)

Related works:
Journal Article: Illegal drugs and public corruption: Crack based evidence from California (2021)
Working Paper: Illegal Drugs and Public Corruption: Crack Based Evidence from California (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2018-39

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