Corruption & Electoral Competition

Mel Lorenzo Accad (University of Hawaii / East-West Center)

Abstract : We ask whether a “hyper-competitive election” (i.e. winning against competitors by very small margin of votes) can be a credible threat on incumbent politicians to lessen the extent of their corrupt activities. A politician may extract funds from public finances to offset or earn more than the incurred costs in election at the expense of less public goods supplied. We hypothesize that the decision to extract money from public finances depends on how the politician weighs the future consequences of getting caught, the credibility of these threat/consequence, the sensitivity of the voters to the supply of public goods, or the viability of an alternative candidate. We created measures of corruption using the audit reports from the Commission on Audit (independent constitutional commission responsible in auditing government finances). We used the Regression Discontinuity Design (RDD) and Difference-in-Difference (DID) as identifying strategies to pin down the causal effect of election competition on corruption. Using the election year as the cut-off, we compared corruption measures between re-electionists who won by very small margin (i.e. under “hyper-competitive” election) versus those who won by large margin.

When Does Ideology Matter? an Empirical Analysis of French Municipalities’ Make-or-buy Choices

Jean BEUVE (University of Paris Panthéon Sorbonne)
Zoé LE SQUEREN (Sorbonne Business School)

Abstract : Many empirical studies have analyzed the factors that influence local government decisions regarding the management of public services. In those studies, ideological motives are often found to be not, or at least very slightly, significant. This absence of ideological impact is often interpreted as a proof that local governments are more guided by pragmatic rather than ideological motivations, notably because contracting out has become less controversial. Nevertheless, ideological factors are almost always estimated by the percentage of left-wing (or right-wing) votes in the last local election and this measure of ideological motives ignores the fact that management of public services might be pathdependent, i.e. strongly connected to choices made by previous officials. In this paper, we show that the configuration of public services procurement at the local level can be explained by ideological motives when ideology is properly measured, that is over a longterm past period. We also find that the influence of ideology is all the more important when services are considered as highly sensitive by local voters.

Institutions and Regulations. Empirical Evidence Across and Within Countries

Simon Hartmann (Vienna University of Economics and Business)

Abstract : Regulatory outcomes of firms vary within and across countries. We identify this variation with Enterprise Survey data using sets of indicators for regulation of entry and trade across borders. First, we do variance decomposition and simultaneous analysis of variances to uncover how much of firm level variation institutions and firm characteristics do explain. Second, guided by existing research on institutions and political economy, we apply random coefficient estimation to isolate the contextual effects of institutions with sectors, regions and firm size for the same set of dependent variables. Third, we test how between and within country heterogeneity of regulatory outcomes interfere with performance of firms and discuss how well heterogeneity in regulatory outcomes predict corruption, governance and economic development. Our results show that formal and informal institutions do not explain the same set of regulations, and that there are significant differences in firm size, corruption and economic development for regulation of entry but not for regulation of trade across borders. We use instrumental variable estimation, sample correction, split samples and alternative datasets to address concerns over endogeneity and selection bias.

The Evolution and Organization of Environmental Agencies

Dean Lueck (Indiana University)
Dominic Parker (University of Wisconsin)

Abstract : We examine public bureaucracy by studying the evolution of state wildlife agencies, from their inception in colonial game laws to their manifestation as modern hierarchical environmental agencies. We develop a model of bureaucracy that considers the problem of managing a large scale environmental asset that spans small private landholdings. We explain how the agency solves the land coordination problem necessary for conserving the asset but requires organizational incentives in order to generate positive rents from the asset. We explain some of the difficult contracting and incentive problems of public wildlife management and describe how autonomous and hierarchical agencies address these problems. The empirical analysis examines the evolution of agencies from laws and employs a panel of the fifty state wildlife agencies to assess the model’s implications. Empirical estimates show that agency budgets rise with increases in private landowner contracting costs as measured by decreases in the size of privately owned parcels in a state. Evidence also shows there are positive relationships between hierarchical organization and the proportion of budgets spent on non-game. Estimates using panel data from 1950-2008 also shows evidence that the specific form of hierarchical organization has systematically relates to agency size.