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

Maximiliano Lauletta, Martín Rossi and Christian Ruzzier

No 157, Working Papers from Universidad de San Andres, Departamento de Economia

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.

Keywords: corruption; audits; efficiency; development; employment; water & sanitation (search for similar items in EconPapers)
JEL-codes: D73 D78 H42 K42 L95 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2021-09, Revised 2021-09
New Economics Papers: this item is included in nep-acc, nep-dev, nep-lam and nep-law
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Downloads: (external link) First version, August 2021. (application/pdf)

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