Plata y Plomo: How Higher Wages Expose Politicians to Criminal Violence

What is the effect of politicians’ wages on corruption in the presence of criminal groups that use both bribes and violence? With a regression discontinuity design and three distinct proxies for corruption, we show that better-paid Italian politicians are more likely to promote transparency and competition in procurement but also more likely to incur criminal attacks. The effects of wages, which subside after three years, are driven by changes in incumbents’ behavior rather than improved selection. These findings show how higher wages may curb corruption, but also foster the use of violence as an alternative tool to influence policymaking. (JEL D72, D73, J31, K42)