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Working Paper nº 554Audit Risk and Rent Extraction: Evidence from a Randomized Evaluation in Brazil

By Stephan Litschig, Yves Zamboni, Yves Zamboni, Stephan Litschig and Fundação Getulio Vargas São Paulo


We report results from a randomized policy experiment designed to test whether increased audit risk deters rent extraction in local public procurement and service delivery in Brazil. Our estimates suggest that temporarily increasing annual audit risk by about 20 percentage points reduced the proportion of irregular local procurement processes by about 17 percentage points. This reduction was driven entirely by irregularities involving mismanagement or corruption. In contrast, we nd no evidence that increased audit risk affected the quality of publicly provided preventive and primary health care services—measured based on user satisfaction surveys—or compliance with national regulations of the conditional cash transfer program Bolsa Família

Topics: Corruption, Rents, Local Governments, Law Enforcement JEL, D73, D78, H41, H83, K42 We are grateful for comments from Emmanuelle Auriol, Martina Björkman, Antonio Ciccone, Denis Cogneau
Year: 2013
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