Electoral competition and corruption: Evidence from municipality audits in Greece

Using data from audits of municipal governments in Greece, I test the hypothesis that electoral competition reduces corruption. Because local election competitiveness is endogenous to local government quality, my identification strategy is based on an instrumental variable approach. Exploiting the fact that voting in the local elections is highly influenced by partisanship, I use the competitiveness of the municipalities in the national elections as an instrument for their competitiveness in the local elections. The IV results suggest that more competitive municipalities have substantially lower levels of corruption. (C) 2019 Elsevier Inc. All rights reserved.