Can anti-corruption policies curb political budget cycles? Evidence from public employment in Brazil
Abstract
Prior research has established that politicians often manipulate public resources before elections to win votes. Much less is known about the effects of policies designed to constrain such behavior. I argue that laws limiting politicians' discretion over policy tools during election periods –a common policy approach– displace (and may even intensify) these cycles. I present evidence to support this hypothesis using administrative data on municipalities in Brazil, where federal laws prohibit hiring bureaucrats around elections. Consistent with strategic adaptation, hiring surges before the freeze period, thereby creating anticipatory cycles. I exploit quasi-experimental variation in political incentives and anti-corruption enforcement to demonstrate that incentives and constraints shape these cycles. These findings reveal a paradox – rather than curbing political budget cycles, election-time constraints on government discretion displace them, potentially deepening their costs for fiscal discipline and electoral fairness. Successful anti-corruption policies must thus account for politicians' strategic adaptation to constraints.
This paper was previously circulated under the title Political bureaucratic cycles. 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)
