The Impact of Mayors’ Corruption on Spanish Municipal Spending

Abstract

We investigate the impact of mayors’ corruption on the size and structure of Spanish municipal budgets. The theory posits that total expenditure is greater in corrupt governments: €77.08 higher per capita in our sample when a corrupt mayor is in office. Moreover, the literature predicts that mayors (agents), will spend more on items directly connected with corruption, rather than expenditure priorities demanded by the citizens (principals). Thus, we show that total expenditure, capital, trash collection and police are higher when corruption exists. Literature predicts that corrupt mayors spend less on items that provide fewer opportunities to collect bribes: our data show that corrupt mayors do not spend more on health. Corrupt mayors spend on average 1.46 years on duty after being taken to court with a formal indictment on a corruption charge. This indicates that in Spain, sadly, resigning the mayoralty is not automatic when facing criminal charges for corruption.

Keywords

• Corruption
• Mayor
• Municipal expenditure