Corruption and the Incumbency Disadvantage: Theory and Evidence

Abstract

Incumbents in many developing democracies face significant disadvantages when seeking reelection, in stark contrast to the well-known incumbency advantage in the United States and other mature democracies. I propose and test a new explanation for this incumbency disadvantage: corruption. Formally, I show that incumbents become more disadvantaged as the cost of committing corruption decreases, the quality of the candidate pool deteriorates, and when gains to corruption increase with time spent in office. I test these hypotheses using innovative measures of local corruption in Romania. Identification comes from two discontinuities: (1) national rules tying mayoral salaries to population thresholds that cause jumps in the opportunity cost of corruption and thus its incidence, and (2) close elections that assign incumbency as if randomly. This strategy provides strong evidence that the large incumbency disadvantage found in Romanian local elections is caused by the incidence of corruption and the large seniority premium to corruption exploited by Romanian mayors.