RESEARCH

RESEARCH PAPERS

Connecting to Win: The Economic Returns of Firms' Political Connections (Job Market Paper, with Valdemar Pinho Neto)

ABSTRACT: This paper investigates the economic returns to political connections in the context of Brazilian local elections, focusing on traditional campaign donations and two novel channels—firms that provide goods or services to candidates during electoral campaigns and firm owners that are affiliated to parties within a coalition. Using a regression discontinuity design around close mayoral races and an event study framework, we find that politically connected firms experience significant gains in public procurement contracts. Political connections increase firms' likelihood of securing contracts from 20 to 40%; they also experience substantial growth in contract values. These effects are the same across firm sectoral corruption levels, but firms are not employing more nor paying their employees more. We show that the 2015 ban on corporate donations reduced the procurement advantages of service-provider firms, suggesting these connections did not become a substitute for banned monetary contributions. Lastly, we find that this form of favoritism adversely impacts educational outcomes, implying broader welfare costs. Our findings contribute to the literature on political favoritism and campaign finance by documenting the emergence and consequences of indirect political connections in a setting with weak institutional constraints.

Presented at (include forthcoming): NICEP, Money in Politics, UoN PhD Conference, UoN School of Economics Applied Micro Group.

Strengthening Party Systems with Electoral Reform: Evidence from Brazil (with Olle Folke and Johanna Rickne)

ABSTRACT: We study impacts on local political assemblies from a Brazilian reform banning local party branches from forming pre-electoral coalitions. We confirm prior research findings of a large immediate reconciliation of local party systems with a sharp drop in the number of small, personalistic parties. We test a series of pre-registered hypothesis about subsequent consequences for party systems, parties, and individual politicians. Contrary to our predictions—reduced party system fragmentation did not forego reductions in electoral volatility or reductions in politicians’ (sky-high) rates of party-switching behaviors. We discuss why the reform seemingly failed to strengthen these important dimensions of local democracy. 

Presented at NICEP and UoN PhD Conference.

Spillover Effects from Inter-Governmental Transfers Between Local Jurisdictions in Brazil

ABSTRACT: This paper estimates fiscal spillover effects between local jurisdiction in Brazil. I use an event study design to study if spillovers arise when a jurisdiction receives a discontinuous jump in its level of transfers from the central government. I find evidence that this revenue increase has positive spillover effects on neighboring municipalities’ public expenditures and labor market. This public additional expenditure is funded by federal discretionary transfers. Results suggests that higher spheres government are compensating local jurisdictions near focal jurisdictions that are treated with additional resources.

Presented at UoN PhD Conference, UoN Applied Micro Group.