Corruption and Firms

Emanuele Colonnelli, Mounu Prem

Research output: Contribution to journalArticlepeer-review

25 Scopus citations

Abstract

We estimate the causal real economic effects of a randomized anti-corruption crackdown on local governments in Brazil using rich micro-data on corruption and firms. After anti-corruption audits, municipalities experience an increase in the number of firms concentrated in sectors most dependent on government relationships and public procurement. Through the estimation of geographic spillovers and additional tests, we show that audits operate via both a direct detection effect as well as through indirect deterrence channels. Politically connected firms suffer after the audits. Our estimates indicate the anti-corruption program generates significant local multipliers which are consistent with the presence of a large corruption tax on government-dependent firms.

Original languageEnglish (US)
Pages (from-to)695- 732
Number of pages37
JournalReview of Economic Studies
Volume89
Issue number2
DOIs
StatePublished - Mar 1 2022

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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