Document Type
Honors Project - Open Access
Abstract
When does improving local institutions increase the poverty-reducing effectiveness of transfers? This paper examines whether federal oversight strengthens municipal administration of anti-poverty programs in Brazil. I develop a governance model in which incumbents allocate resources across diversion, effort, and institutional investment under audits and incentives. Using exogenous variation from Brazil's random CGU audit lottery across 5,500 municipalities, I find audits reduce irregularities, strengthen capacity, improve nutritional monitoring and school infrastructure, and reduce extreme poverty — with effects largest in municipalities with weakest institutions. A marginal-value-of-public-funds analysis confirms the program is self-financing. Results show the poverty-reducing power of transfers depends critically on institutional quality.
Recommended Citation
N'guettia, Adaye Sosthene Yvan, "The Lottery You do not Want to Win: The Role of Local Institutional Quality in Brazil's Fight Against the Persistent Transmission of Poverty" (2026). Economics Honors Projects. 138.
https://digitalcommons.macalester.edu/economics_honors_projects/138
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