Electoral cycles of corruption: Evidence from municipal audits in Mexico

Abstract:

Why are some incumbents more corrupt than others? We argue that electoral politics is criti-cal to understand the strategic corrupt behavior of local governments. Using fine-grained dataof more than 12 billion dollars audited to 2,591 incumbents in Mexican municipalities over adecade, we uncover an electoral cycle of corruption —incumbents misappropriate more resourcesduring electoral times. We adjudicate between two theoretical mechanisms that could be drivingsuch cycles: An (1) opposition-drivenmechanism in which corrupt behavior decreases strategi-cally to avoid being discredited by the opposition; and (2) aparty-drivenmechanism in whichincumbents behave strategically to protect the reputation of their party. A regression discon-tinuity design that exploits close elections of mayoral candidates aligned with both the stateand federal governments, provides support for the party-driven mechanism. Party homogeneityacross government levels creates conditions for more efficient and strategic use of corruption