With Brad N. Greenwood. Under review at Management Science. (SSRN)
The newspaper industry is perhaps the most notable casualty of the rise of the digital age. In this work, we examine how the decline of local reporting capacity which accompanied the emergence of digital newsrooms and content aggregators influences local levels of political corruption. As is well known, newspapers are viewed as an important investigative arm of local communities. It is therefore possible that the decline of local media will embolden corrupt actors who believe they are less likely to be detected, and create the potential for substantial deadweight loss in the economy. To examine these relationships, we leverage a novel dataset of federal charging documents of corruption and daily newspaper closures using a difference in difference approach. Results indicate a significant rise in federal corruption charges when major newspapers close in a federal district. Strikingly, we observe no evidence that the rise in online newsvendors is able to ameliorate this effect. This highlights the important role of the traditional “fourth estate” in inhibiting corruption in governance.
Photo by Rick Valentin.