Audits and Bureaucratic Corruption: Evidence from Brazilian Municipalities
Previous studies find that anti-corruption audits are effective in disciplining politicians, but their impact on bureaucrats is unclear. We investigate the impact of anti-corruption audits on bureaucrats drawing upon 15 years of randomized audits and the careers of 1.1 million Brazilian municipal cabinet members. Audits cause increases in career interruptions. Those are especially high for co-partisans of the mayor and bureaucrats that are relatively well-paid relative to their estimated private-sector wage, and in municipalities displaying intermediate levels of corruption, suggesting that audits are relatively effective at punishing corrupt bureaucrats. Increased dismissals are concentrated among mayors who may not run for reelection, suggesting that electoral accountability mechanisms shown to discipline politicians do not trickle down to bureaucrats; rather, mayors tend to clean their accounts before leaving office. Structural estimates indicate that the increased resignation rates observed after audits owe to reduced rent-seeking opportunities rather than increased risk of dismissal.