Research
Publications
Rules, Discretion, and Corruption in Procurement: Evidence from Italian Government Contracting (with Francesco Decarolis, Raymond Fisman and Paolo Pinotti) Accepted, Journal of Political Economy: Microeconomics.
The benefits of bureaucratic discretion depend on the extent to which it is used for public benefit versus exploited for private gain. We study the relationship between discretion and corruption in Italian government procurement auctions, using a confidential database of firms and procurement officials investigated for corruption by Italian enforcement authorities. Based on a regression discontinuity design around thresholds for discretion, we find that, overall, a large increase in the use of discretionary procedures in the 2000s led to a minimal increase in auctions won by investigated firms. To understand this ‘non-result,’ we further investigate the attributes of “corrupted” auctions. We show that discretionary procedure auctions are associated with corruption only when conducted with fewer than the formally required number of bidders; similarly, discretionary criteria (“scoring rule” rather than first price) auctions are won more often by investigated firms. We further show that these “corruptible” discretionary auctions are chosen more often by officials who are themselves investigated for corruption, but less often in procurement administrations in which at least one official is investigated for corruption. These findings fit with a framework in which more discretion leads to greater efficiency as well as more opportunities for theft, and a central monitor manages this trade-off by limiting discretion for high-corruption procedures and locales. Additional results based on two standard tools for curbing corruption – turnover and subcontracting limits – corroborate this interpretation. Overall, our results imply that discretion is under-utilized, given the high potential benefits as compared to the modest increment in corruption.
Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes (with Gerard Domenech Arumi), NBER WP 30301, Review of Economics and Statistics, 2023.
We exploit an unanticipated labor market reform to estimate the effects of pro-cyclical changes in long-term unemployment assistance (UA). In July 2012, Spain raised the minimum age to receive unlimited-duration UA from 52 to 55. Using a difference-in-differences design, we document that shorter benefits caused (i) shorter non-employment duration, especially among younger workers; (ii) higher labor force exit and other programs' take-up, especially among older workers; (iii) lower wages upon re-employment. The reform induced moderate government savings. Our results highlight the importance of considering the interplay with labor market conditions when designing long-term benefit schedules that affect workers close to retirement.
The Distributional Preferences of Americans, 2013-2016 (with Raymond Fisman, Pamela Jakiela and Shachar Kariv)
Experimental Economics, 2023.
We study the distributional preferences of Americans during 2013-2016, a period of significant social and economic upheaval. We decompose preferences into two qualitatively different tradeoffs -- fairness versus self-interest, and equality versus efficiency -- and measure both at the individual level in a large and diverse sample. The population-level distributions of preferences remain remarkably stable overall, and individual-level preferences in 2013 are highly predictive of those in 2016. Subjects that experienced an increase in household income became more self-interested, and those who voted for Democratic presidential candidates in both 2012 and 2016 became more equality-oriented.
Gender and bureaucratic corruption: Evidence from two countries (with Francesco Decarolis, Raymond Fisman, Paolo Pinotti and Yongxiang Wang)
Journal of Law, Economics and Organization, 2022.
We examine the correlation between gender and bureaucratic corruption using two distinct datasets, one from Italy and a second from China. In each case, we find that women are far less likely to be investigated for corruption than men. In our Italian data, female procurement officials are 34 percent less likely than men to be investigated for corruption by enforcement authorities; in China, female prefectural leaders are as much as 75 percent less likely to be arrested for corruption than men. While these represent correlations (rather than definitive causal effects), both are very robust relationships, which survive the inclusion of fine-grained individual and geographic controls.
Distributional preferences in larger groups: Keeping up with the Joneses and keeping track of the tails (with Raymond Fisman and Ilyana Kuziemko)
Journal of the European Economic Association, 2020.
We study distributional preferences in “large” groups. While most prior experiments have focused on exploring attitudes toward inequality in two- or three-person groups, we field a series of experiments via Mechanical Turk in which subjects choose between two income distributions, each with seven (or nine) individuals, with hypothetical incomes that aim to approximate the actual distribution of income in the U.S. Our setting thus provides a more direct comparison to the redistributive choices faced by society. Consistent with standard maximin (Rawlsian) preferences, subjects select distributions in which the bottom individual’s income is higher (but show little regard for lower incomes above the bottom ranking). In contrast to standard models, however, we find that subjects select distributions that lower the top individual’s income, but not other high incomes. Finally, we provide tentative evidence of “locally competitive” preferences—in most experimental sessions, subjects select distributions that lower the income of the individual directly above them, while the income of the individual two positions above has little effect on subjects’ decisions. Our findings suggest that theories of inequality aversion should be enriched to account for individuals’ aversion to “topmost” and “local” disadvantageous inequality.
Working Papers
From Lapdogs to Watchdogs: Random Auditor Assignment and Municipal Fiscal Performance. NBER WP 30644
A fundamental question in organizational economics is how to structure organizations to better align incentives across levels. While monitoring could mitigate agency problems, it can itself be rendered ineffective if auditors are corruptible. In this paper, I evaluate the consequences of changes in the design of monitoring institutions that limit auditors' conflicts of interest. I exploit the staggered introduction of a reform that removed the control of auditors' appointment from local politicians and introduced a random assignment mechanism. I obtain four main findings. First, random matching severs auditors-mayors connections. Second, treated municipalities significantly improve their net surpluses and debt repayments, per national government objectives. Third, the fiscal improvement results from a sizeable increase in tax capacity. Fourth, treatment effects are a combination of selection, matching, and incentive effects. These findings highlight the value of auditor independence and illustrate how changes in the organizational design of the state can improve governance.
Government Audits (with Martina Cuneo and Jetson Leder-Luis). NBER WP 30975, submitted.
Audits are a classic mechanism to ensure accountability in the management of public funds. While commonly used, audits are costly and do not always produce valuable results. In this paper, we use theory and empirics to examine the effectiveness of internal government audits as a function of state capacity. In our model, the value of audits depends on both the underlying presence of abuse and on the government's ability to enforce punishments, making auditing most effective in middling state-capacity environments. Consistent with this theory, we survey all the existing credibly causal studies and show that government audits have positive effects mostly in middle-state-capacity environments like Brazil. Finally, we present novel empirical evidence on the effectiveness of audits for local governments in the US, a high-capacity and low-impropriety environment. Using a previously unexplored threshold in federal audit rules and a dynamic regression discontinuity design, we find no marginal effects of audits on any fiscal outcomes of local governments, a result that is in line with the predictions of our model. Overall, our findings suggest that countries like the US might benefit from relaxing audit requirements and reducing their regulatory burden.
The Political Economy of Stimulus Transfers
Stimulus payments are one of the most common policy tools during economic downturns. To maximize effectiveness, transfers should target liquidity-constrained individuals yet they often end up benefiting the middle class. I argue that political incentives might explain this puzzle. I study one of the largest stimulus tax credits in history, that targeted median earners and excluded the lowest-income groups. The transfer modestly boosted consumption but significantly increased the incumbent’s vote share by 0.19 pp per 1 pp rise in recipients. Electoral rewards persist up to five years post-policy introduction. I then document stronger responses in localities with relatively richer beneficiaries, suggesting that electoral incentives may prompt politicians to prioritize middle-income, electorally responsive groups over the poorer, more consumption-responsive ones. Finally, I document significant punishment of the incumbent among individuals who lose access to the transfer, which help explain politicians’ reluctance to repeal transfers, despite their substantial costs. Overall, these findings demonstrate the importance of considering political economy factors to understand the design of major policies.
Back to Black? The Impact of Regularizing Migrant Workers (with Edoardo Di Porto, Enrica Maria Martino and Paolo Naticchioni), submitted.
Using unique matched employer-employee data on the universe of workers in Italy, we evaluate one of the world's largest amnesties that regularized over 700,000 un-documented migrants. We employ a difference-in-differences design, comparing firms that regularized at least one migrant to a control group of eligible firms that applied for the regularization process but did not complete it. We document four sets of results. First, the policy has a positive and sizeable impact on firm-level employment in the short run, which only partially fades out in the long run. Second, average firm-level wages experience a small and persistent decrease. Third, at the firm-level, the consequences of the regularization are mainly borne by incumbent migrants, with more limited impact on natives. At the individual level, although the regularization induces changes in the composition of employment, it does not affect native workers' careers in the subsequent years. Fourth, we document a sizeable hysteresis effect of the regularization: 73.5\% of newly regularized migrants are still employed in the formal Italian labor market after 4 years, well beyond the expiration of their temporary work permit.
Selected Work in Progress
Revolving Doors and Political Selection (with Raymond Fisman, Jetson Leder-Luis and Catherine O' Donnell).
Gender Differences in Policy Knowledge (with Veronica Grembi).
Immigrants’ Legalization and Firms: Evidence from the 2007 EU Enlargement (with Vittoria Dicandia).
This project is made possible thanks to the Visitinps Scholars program, granting access to the universe of italian Social Security Data.
The Economic Effects of Public Hiring Constraints (with Edoardo Di Porto, Maria Carreri, Carlo Medici and Edoardo Teso).
This project is made possible thanks to the Visitinps Scholars program, granting access to the universe of italian Social Security Data.
The Causes and Consequences of Physician Shortages (with Giovanni Pisauro).