The Real Costs of Washing Away Corruption: Evidence from Brazil's Lava Jato Investigation

Ferraz, Moura, Norden, and Schechtman (NBER, July 2025), using a difference-in-differences design with data from RAIS and the Central Bank's credit registry, estimated that the 21 investigated construction companies saw a 63% drop in wage bill and a 54% drop in employment after the investigations began, compared with control firms with more than 250 employees; the volume of new loans to them fell 50%.

Source: The Real Costs of Washing Away Corruption: Evidence from Brazil's Lava Jato Investigation — NBER (Working Paper 33991), July 2025 · Introduction, pp. 1–2; Table 2 and Figure 3 · open original ↗

Study (primary) · full text examined · accessed on Oct. 24, 2026

Limitations: Working paper (not peer-reviewed at the time), sample of large firms through mid-2016. It measures the effect on the investigated firms of the combination 'investigation, loss of access to public contracts and credit, recession'; the text itself notes that the loss of public contracts occurred alongside the collapse of construction and the 2015–2016 recession. It does not measure the effect on GDP.

The same study estimated that private banks with greater prior exposure to the investigated firms reduced new credit to non-investigated firms (an aggregate effect of -18% in new credit at the firm level) and that non-investigated firms more exposed through their banking relationships reduced their wage bill by 12% and employment by 10% after the investigations began.

Source: The Real Costs of Washing Away Corruption: Evidence from Brazil's Lava Jato Investigation — NBER (Working Paper 33991), July 2025 · Introduction, pp. 3–4; Tables 4 to 7 · open original ↗

Study (primary) · full text examined · accessed on Oct. 24, 2026

Limitations: Relative effect between more and less exposed firms, not the total effect on the economy; sample of large firms (>250 employees); public banks are outside the main analysis.

Among the 21 investigated construction firms that make up the NBER study's treatment group, two went bankrupt (GDK and Schahin) and twelve entered judicial reorganization during or after the sample period; in only seven of them were the main executives not arrested or sought by the Federal Police, and all were excluded from business with the government (Szerman, 2023, cited).

Source: The Real Costs of Washing Away Corruption: Evidence from Brazil's Lava Jato Investigation — NBER (Working Paper 33991), July 2025 · Section 2, p. 8 · open original ↗

Study (primary) · full text examined · accessed on Oct. 24, 2026

Limitations: Count from the study, based on Campos et al. (2021), Netto (2016) and Gonzalez-Ocantos et al. (2023); the list of the 21 companies was not checked in this version of the collection.

The NBER study describes Lava Jato as an investigation that resulted in more than 360 convictions, nearly 400 cooperation agreements, and about 30 corporate leniency agreements, and states that defendants paid about US$3 billion in fines, penalties, and voluntary restitution (citing Da Ros and Taylor, 2022).

Source: The Real Costs of Washing Away Corruption: Evidence from Brazil's Lava Jato Investigation — NBER (Working Paper 33991), July 2025 · Section 2, p. 7 · open original ↗

Study (primary) · full text examined · accessed on Oct. 24, 2026

Limitations: Third-party context (Da Ros and Taylor, 2022); the recovery amounts must be checked against another record in the archive with documents from the MPF, CGU, and AGU.