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Do Political Connections Reduce Job Creation? Evidence from Lebanon

Ishac Diwan () and Jamal Haidar ()
Additional contact information
Jamal Haidar: Harvard University

No 1054, Working Papers from Economic Research Forum

Abstract: Using firm-level census data, we determine how politically-connected firms (PCFs) reduce job creation in Lebanon. After observing that large firms account for the bulk of net job creation, we find that PCFs are larger and create more jobs, but are also less productive, than non-PCFs in their sectors. On a net basis, at the sector-level, each additional PCF reduces jobs created by 7.2% and jobs created by non-PCFs by 11.3%. These findings support the notion that politically-connected firms are used for clientelistic purposes in Lebanon, exchanging privileges for jobs that benefit their patrons’ supporters.

New Economics Papers: this item is included in nep-ara and nep-pol
Date: 2016, Revised 2016
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Published by The Economic Research Forum (ERF)

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