Browsing by Subject "Corruption"

Acts of corruption at all levels have serious negative consequences for governments' finances and citizens' standards of living. Yet, corruption is largely sustained by norms and behavior (e.g., favoring one's family, reciprocity) that would be considered pro-social, were it not for the fact that they involve the misuse of public funds and the abuse of public office. In this dissertation I explore two themes that underpin this contradiction. First, citizen-bureaucrat relations, and how individuals, in their roles as ordinary citizens or managers of firms, use connections to elected officials and bureaucrats to obtain privileged access to public services or public procurement contracts. Second, the link between bureaucratic capacity and corruption. Chapter 2 proposes a novel explanation for citizen engagement in collusive forms of petty corruption. It is rooted in the social context in which citizen-bureaucrat interactions take place. I argue that social proximity and network centrality provide the two key enforcement mechanisms that sustain favor exchanges among socially connected individuals. Bribery, as a collusive arrangement between a citizen and a public official, relies on the same enforcement mechanisms. Using an original dataset from a household survey conducted in Guatemala, the analysis shows that social proximity and centrality allow citizens to obtain privileges through implicit favor exchanges and illicit payments. These effects go beyond simply increasing the frequency of contact with public officials and are not driven by better access to information about the bribery market. Chapter 3 examines how exposure to, or engagement in different forms of petty corruption transforms into overall assessments of state capacity. In it, I argue that two components of corrupt transactions, namely whether a payment is required and whether an illegal advantage is granted, affect citizen’s perceptions of state capacity in different ways. The act of paying a street-level bureaucrat informs a citizen of the state’s inability to prevent its workers from engaging in corruption. In contrast, the experience of obtaining illicit advantages informs a citizen of the state’s ability to provide expedited service delivery. To test the implications of this argument I rely, once again, on survey data from Guatemala, and find that exposure to extortion by street-level bureaucrats has a negative effect on individuals’ perceptions of the government’s capacity to provide services. Furthermore, obtaining illicit advantages through favor exchanges positively impacts perceptions of state capacity, but engaging in bribery has no effect on such perceptions since the effect of making a payment offsets that of receiving an advantage. Finally, Chapter 4 explores the dynamics of political favoritism in public procurement. In this chapter, I draw a sharp distinction between the extent to which a bureaucracy is politically controlled and its technical capacity. I argue that in politically controlled bureaucracies, stronger technical capacity facilitates corruption. In such contexts, more capable bureaucrats utilize their skills to shield favored firms from competition using complex strategies that minimize the risk of detection. I test the argument on a novel dataset of 54,623 municipal contracts in Guatemala and 21,631 firm-politician ties. In line with the argument, I find that more capable bureaucracies increase the likelihood of well-connected firms winning contracts through less competitive processes, even after controlling for a firm’s experience, size and previous business with the municipality. Furthermore, my analysis suggest that high-skilled bureaucrats rely on tender manipulation to favor connected firms.

This dissertation comprises of three essays in law and economics. The first chapter, a joint work with my advisor - Marjorie McElroy, examines the longly debated effect of the liberalized divorce laws in the United States on the divorce rates during 1956-1989. The first and the second chapter are a theoretical and an empirical paper on a cooperative game of bribery.

Scholars contend that in a weak institutional context, firms enter the political marketplace primarily through bribery or entrepreneurs running for public office. My dissertation challenges this conventional understanding by arguing that revolving-door channels have become a prevalent means of rent-seeking when within-government career opportunities are rare for public officials and the private sector is profitable. This dissertation proposes a theoretical framework for understanding the emergence of revolving-door officials in authoritarian regimes and tests this framework through a rigorous inquiry of firms in China. The three papers that constitute this work analyze the pattern, formation, and economic outcome of hiring revolving-door officials. I show the distortionary impact of post-government career concerns on public resource allocation, a mixed revolving-door recruitment strategy adopted by firms seeking both political power and regulatory expertise, and the salient signaling effect of revolving-door connections on financial investors.

In this dissertation, I take a new approach to presidential scandal, which is frequently attributed to evidence of misbehavior. I argue instead that scandal is a socially constructed perception of misbehavior which opposition elites help create. I formalize this argument by developing a model of presidential scandal, which predicts that allegations of scandal by opposition legislators can influence the occurrence of scandal within some intermediate range of allegation scandalousness and credibility. I derive two comparative statics showing that the incidence of scandal should increase as the transaction costs of allegations decrease and as the critical mass of opposition legislators required to create a scandal decreases.

I then test the predictions of the model using monthly data from elite news reports for 1977–2006. I operationalized the critical mass comparative static using presidential approval among opposition party identifiers—a useful index of a polarized political climate. I find that the president is more vulnerable to the onset of scandal when his levels of opposition approval are relatively low. Conversely, when the president is relatively popular with opposition identifiers (during “honeymoons,” foreign policy crises, and wars), scandals occur much less frequently. In addition, scandals appear to have become more common over time, which could be the result of increased party polarization. Finally, I show that the underlying hazard of scandal was greater for second-term presidents than for first-term presidents.

Clearly, however, scandals vary widely in their size and significance. As such, I also create a dependent variable measuring the total quarterly volume of presidential scandal coverage in the Washington Post, which should capture the aggregate severity of scandals in a given time period. I show that lagged presidential approval among opposition identifiers is negatively associated with this measure. By contrast, more scandal coverage is published during presidents' second term in office and during election years.

Journalists and scholars frequently assert that divided government leads to a greater incidence of presidential scandal, but little systematic evidence exists to support these claims. An investigation reveals that divided government suffers from several important inferential problems, including a lack of comparable counterfactual data.. After addressing these issues, I estimate treatment effects for divided government and opposition control of Congress on both high-profile investigations of the president and scandal coverage, but none reach conventional levels of statistical significance.

Next, I explore the factors predicting when individual members of Congress will make scandal allegations against the president and the executive branch. Specifically, I test hypotheses developed from my formal model on a new dataset of scandal allegations against the president in the Congressional Record between 1985 and 2006. Results from multilevel event count models indicate that scandal allegations decline as state- and district-level presidential vote increases among members of the opposition party in both the House and the Senate. Members of the Senate are also more likely to make allegations as they gain seniority within the chamber. Finally, members who are up for re-election in the Senate make fewer allegations than those who are not.

Finally, I analyze the allegation data as a series of social networks. I present a new approach to analyze clustering in these data, which helps us to characterize patterns in allegations and member behavior. My analysis indicates that clustering among members—which suggests a convergence in scandal targets—is positively associated with increased scandal coverage at the Congress level. By contrast, I find that highly clustered allegations (i.e. those made by members who also made other allegations together) tend to receive less coverage than those that attract support from a broader coalition of members who would otherwise not be connected.

Political factors play a big role in influencing the ebbs and flows of corruption. The literature seems unanimously in agreement that, even in places where corruption is entrenched and systemic, the political calculations of individual politicians can still have an impact on corruption outcomes. On the other hand, while canonical research has delved into the divergent inner workings of different types of corruption for decades, studies on the link between politics and corruption have not paid sufficient attention to these distinctions. This dissertation speaks to the idea that politics influences different types of corruption differently in different settings. I seek to shed some light on how types of corruption and political contexts matter by studying wrongdoing at local governments in Vietnam. A contribution of the dissertation is the data collection efforts to acquire novel datasets. I got access to fine-grained data on bribery behavior at Vietnamese firms by working on the survey team for the Vietnam Provincial Competitiveness Index (PCI) for four years. On the politics side, I constructed a dataset on the career paths of Vietnamese provincial leaders since late 1990s, using information from newspapers, administrative almanacs, and various Internet sources.