Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament

André Diegmann (geb. Nolte), Laura Pohlan and Andrea Weber

No 17031, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset to measure connections between politicians and the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. The economic effects are mediated by better credit ratings while access to subsidies or procurement contracts are documented to be of lower importance.

Keywords: identification; firm performance; politicians; political connections (search for similar items in EconPapers)
JEL-codes: D72 L25 O43 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2024-05
New Economics Papers: this item is included in nep-bec, nep-ent, nep-pol and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament (2025)
Working Paper: Do politicians affect firm outcomes? Evidence from connections to the German Federal Parliament (2025)
Working Paper: Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament (2024)
Working Paper: Do politicians affect firm outcomes? Evidence from connections to the German Federal Parliament (2024)
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