Seminario CEDE - Pablo Querubin

What is the equilibrium effect of politicians’ wages in the presence of criminal groups, that use both bribes and violence? With a regression discontinuity design, we show that better-paid local politicians in Italy are significantly more likely to prevent corruption in public procurement, but are also more likely to be targeted by criminal attacks. The disciplining effect of wages, which subsides after three years, is driven by a change in incumbents' behavior rather than improved selection. These findings show how higher wages may curb corruption, but also foster the use of violence as an alternative tool to influence policymaking.