A Bonanza for Bad Politicians: Informal Gold Mining and Criminal Candidates in Peru
How do natural resource windfalls affect the quality of politicalcandidates? Existing scholarship argues that non-tax public revenuehas a negative effect on the characteristics of candidates because itimpairs the capacity of voters to hold leaders accountable. This liter-ature, however, has not considered other non-tax sources of revenue,namely, the rents derived from the informal and illegal exploitation ofnatural resources. In this paper, I analyze the effects of an increaseof informal gold production in Peru. I find that in districts that havehigher levels of informal gold mining, increases in prices worsens thequality of politicians. In particular, I use novel data on the crimi-nal records of candidates to show that a spike in the price of goldattracts more criminal candidates to politics and leads elected politi-cians to be accused of committing a crime more often. Interestingly,I also find that candidates who have a criminal record are less likelyto be elected. These results suggest that information on the trajec-tories of politicians is key to improve the quality of candidates that will be elected, and that the enforcement of natural resource regula-tion is crucial to eliminate the influence of rents on the behavior ofpoliticians.