Electoral Accountability and Corruption: Evidence from the Audits of Local Governments

TLDR

The study demonstrates that political institutions influence corruption levels. Using Brazilian audit reports, the authors construct corruption metrics for local governments and assess how electoral accountability affects incumbent politicians’ corrupt practices. Municipalities where mayors can be reelected show markedly lower corruption, with reelection incentives cutting resource misappropriation by 27 %—particularly in areas with limited information and weak judicial deterrence—highlighting the role of electoral accountability in curbing corruption. JEL codes: D72, K42, O17.

Abstract

We show that political institutions affect corruption levels. We use audit reports in Brazil to construct new measures of political corruption in local governments and test whether electoral accountability affects the corruption practices of incumbent politicians. We find significantly less corruption in municipalities where mayors can get reelected. Mayors with reelection incentives misappropriate 27 percent fewer resources than mayors without reelection incentives. These effects are more pronounced among municipalities with less access to information and where the likelihood of judicial punishment is lower. Overall our findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician's corrupt behavior. (JEL D72, K42, O17)