Corrupt Bureaucrats: The Response of Non-Elected Officials to Electoral Accountability

Abstract

Modern state bureaucracies are designed to be insulated from political interference. Successful insulation implies that politicians' electoral incentives do not affect bureaucrats' corruption. I test this prediction by assembling a unique dataset on corruption, promotions and demotions for more than 4 million Indonesian local civil servants. To identify the effect of reelection incentives, I exploit the existence of term limits and a difference-indifference strategy. I find that reelection incentives decrease the corruption behaviour of both top and administrative bureaucrats, which constitutes new evidence of the deep, farreaching effects of politicians' accountability on local civil servants. I explore a mechanism where bureaucrats have career concerns and politicians facing reelection manipulate such concerns by increasing the turnover of top bureaucrats. Consistent with this mechanism, I find that reelection incentives increase demotions of top bureaucrats and promotions of administrative bureaucrats.