Can anti-corruption policies curb political budget cycles? Evidence from public employment in Brazil
Abstract
A vast literature on political cycles has shown that politicians often manipulate policy tools ahead of elections to win votes. Yet much less is known about the effects of policies designed to constrain these cycles. I argue that legal constraints on politicians' discretion over tools like spending, debt, transfers, or hires ahead of elections simply displace –and can even exacerbate– such cycles. I demonstrate these unintended consequences using large, monthly panels of Brazilian municipalities to measure cycles in public employment. Federal laws ban hiring and firing bureaucrats in a 6-month period around elections. Consistent with politicians anticipating and strategically responding to these constraints, hiring decreases during this freeze period, but increases in the months before the ban. Cycles are not restricted to political advisers or to temporary employees – they are present across all levels of the bureaucracy and in the civil service too. These patterns are even more pronounced in localities that experience a randomized anti-corruption audit. These findings highlight how the effectiveness of anti- corruption strategies can be undermined by politicians' strategic responses to them.
Presented at ICADE (2024), Oxford University (2023), King’s College London (2022), Vanderbilt (2022), FGV-EBAPE (Rio de Janeiro, 2022), FGV-CEPESP (Sao Paulo, 2018), the American Political Science Association Annual Meeting (APSA, Montreal, 2022 and Washington DC, 2019), the Midwest Political Science Association Annual Conference (MPSA, Chicago, 2022), the Red para la Economía Política de América Latina Annual Meeting (REPAL, New Orleans, 2019), and the Latin American Studies Association Congress (LASA, online, 2022 and 2023, and Barcelona, 2018)
