Illegal drugs and public corruption: Crack based evidence from California

Do illegal drugs foster public corruption? To estimate the causal effect of drugs on public corruption, we adopt the synthetic control method and exploit the fact that crack cocaine markets emerged in California in 1981, before reaching any other U.S. state. Our results show that public corruption more than tripled in California in the first three years following the arrival of crack cocaine. We argue that this resulted from the particular characteristics of illegal drugs: cheap technology and rigid demand, which fosters a convergence of interests between criminals and corrupted public officials resulting in a positive causal impact of illegal drugs on corruption.