De Luca, G., "Elections for sale? Evidence from Italian local elections"

Title: "Elections for sale? Evidence from Italian local elections"

Speaker: Giacomo Davide De Luca, Professor of Economics - Free University of Bozen-Bolzano

Host:  Assistant Professor Vassilis Sarantides, Department of Economics, Athens University of Economics and Business

Venue:  76, Patission Str., Antoniadou Wing, 3rd floor, Room A36

Abstact: This paper studies the dynamics of electoral corruption in the context of local elections in Italy. It exploits the asynchronous nature in the timing of mayoral elections to estimate a relationship between elections and the municipality-level amount exchanged through cash transactions. Cash transactions are sourced from a unique comprehensive dataset, taken from the Aggregate Anti-Money Laundering (AML) Reports between 2008 and 2018, which all Italian financial intermediaries are mandated to file with reference to transactions worth euros 15,000 or more. The difference-in-difference estimates, including municipality and time fixed effects, suggest that the municipal elections in Italy systematically trigger an anomalous increase in the volume of cash  transactions, which we interpret as evidence of electoral corruption, i.e. an intense circulation of money to secure electoral support in the shadow of the law. Exploring the heterogeneity of our main result along several potential mediating factors confirms some intuitively appealing patterns, such as tighter competition, the presence of active criminal organizations, as well as the size of the municipality budget, let us show which significantly affects the volume of cash transactions.