Corruption and legislature size: Evidence from Brazil |
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Affiliation: | 1. CLEAN- Crime: Law and Economic Analysis (CLEAN) - Bocconi University, Milan, Italy;2. GAPPE - Grupo de Avaliação de Políticas Públicas e Econômicas – UFPE, Recife, Brazil;3. IZA Institute of Labor Economics, Bonn, Germany;4. IGIER - Innocenzo Gasparini Institute for Economic Research - Bocconi University, Milan, Italy;5. eLEAP - Laboratory for Effective Anti-Poverty Policies – Bocconi University, Milan, Italy;1. Economics Department, University of Genoa, Italy;2. Bangor Business School, Bangor, United Kingdom;3. Political Science Department, University of Genoa, Italy;1. Department of Humanities and Social Sciences, Indian Institute of Technology Dharwad, Karnataka, 580011, India;2. Department of Economic Sciences, Indian Institute of Technology Kanpur, Uttar Pradesh, 208016, India;1. Development Economics (DEC), The World Bank, 1818 H St. NW, Washington, DC, 20433, USA;2. Macroeconomics and Fiscal Management (MFM), The World Bank, 1818 H St. NW, Washington, DC, 20433, USA;1. Department of Economics, Florida International University, FL, 33199, USA;2. Department of Economics, Deakin University, Victoria, 3125, Australia |
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Abstract: | This paper studies whether and how legislatures affect political corruption. Using a regression discontinuity design in the context of Brazilian municipalities, we find a positive causal impact of council size on corruption levels, as detected by random federal audits. This indicates that an extra councilor represents an additional political actor potentially interested in diverting public resources, which we define as a rent extraction effect. However, we find further evidence that, in some contexts, larger councils enhance the representation of opposition parties and effectively increase monitoring over the executive, attenuating the rent extraction effect. Namely, in municipalities where opposition parties are typically underrepresented, the additional seat in the council is absorbed by the opposition and corruption outcomes do not worsen. In addition, only in such context, mayors are more commonly sentenced for misconduct in office by judicial authorities, whose investigations anecdotally often originates from councilors denouncing mayors to local courts. Overall, our findings show that legislature size is detrimental to corruption outcomes but less so where the representation of opposition parties improves with the enlargement of the legislature. |
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Keywords: | Corruption Council size Legislative oversight Regression discontinuity D72 D73 H72 |
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