Are Anti-Corruption Audits Effective? Evidence From Brazilian Municipal Bureaucracies

Abstract

For public officials, the decision to engage in corruption is embedded into a broader set of career considerations. In contrast to politicians, bureaucrats usually enjoy lifelong tenure. As such, bureaucrats may respond differently to punctual events such as anti-corruption audits. In this paper, we propose a model of corruption with career concerns. We show that because bureaucrats have a long time horizon, anti-corruption audits may have long- and short-term effects, triggering either permanent or temporary reductions in corruption. We test the model on a program shown to be effective – randomized audits in Brazilian municipalities. Considering the effects of 10 years of audits on the careers of over 275 thousand municipal officials, we find that audits failed to trigger either short- or long-term deterrence from corruption. Our estimates show that audits only led to a 4 percent overall reduction in corruption, and ultimately cannot substitute for long-term improvements in the institutional environment.