Economic Shocks, Opportunity Costs, and the Supply of Politicians

Laura Barros and Aiko Schmeißer

No 12327, CESifo Working Paper Series from CESifo

Abstract: Adverse economic shocks are known to reshape voter behavior – the demand side of politics. Much less is known about their consequences for the supply side: how such shocks affect who becomes a politician. This paper examines how job losses influence individuals' decisions to enter politics and the implications for political selection. Using administrative data linking political participation records to matched employer-employee data covering all formal workers in Brazil, and exploiting mass layoffs for causal identification, we find that job loss significantly increases the likelihood of joining a political party and running for local office. Layoff-induced candidates are positively selected on various competence measures, indicating that economic shocks can improve the quality of political entrants. The increase in candidacies is strongest among laid-off individuals with greater financial incentives from holding office and higher predicted income losses. A regression discontinuity design further shows that eligibility for unemployment benefits increases political entry. These results are consistent with a reduction in individuals' opportunity costs – both in terms of reduced private-sector income and increased time resources – facilitating greater political engagement.

Keywords: political selection; economic shocks; job loss; mass layoffs (search for similar items in EconPapers)
JEL-codes: D72 J63 J65 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12327

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