In the Golden Cage: The Relationship between Social Investment and Corruption in Czech Municipalities

Clientelism is associated with an exchange of cash or material goods for political support. What was less covered in the research is how the mayors in cities with high corruption invest in public goods to target part of the population in high-income countries where vote buying is expensive. Do cities with a high risk of corruption invest more in targetable social benefits? Mayors can purposely increase social spending and short term investment to secure their position in power and further access to rents. This article investigates the intersection between corruption, clientelism and political accountability. The paper uses quantitative analysis of 300 Czech cities and towns. I test this hypothesis using an index of risk of corruption in procurement in cities and towns in the Czech Republic and match it with municipal budgets and an originally compiled list of mayors. The identification comes from two discontinuities: national rules tying mayoral salaries to population thresholds that cause jumps in motivations of mayors to continue in power and national rules that considers population threshold for the size of central government subsidy that creates an exogenous constraint on the budget. The preliminary results show that cities with a higher risk of corruption invest more in targetable social benefits. However, this relation fades with the time the incumbent spend in the office.