Poverty, Party Alignment, and Reducing Corruption through Modernization: Evidence from Guatemala

(with Akshat Gautam)

We show that once reductions in poverty decrease voter need for clientelism, it ultimately reduces corruption through political selection. Our theoretical and empirical framework focuses on party alignment–i.e., when local-level politicians share the same party as the executive. Aligned politicians generally enjoy resource advantages due to their affiliation with the executive, but we show that close elections discipline aligned politicians to engage in less corruption after voters’ economic circumstances improve. For causal identification, we rely on close-election regression discontinuity designs that analyze the number of audit violations committed and the amount of money misappropriated in Guatemalan municipalities. The results of our study help document how reductions in poverty decrease corruption through modernization, and how political selection and party system stability are central to the process. [Draft Paper] [Presentation]