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Gains from Early Support of a New Political Party

Marco Leonardi (), Rossella Mossucca (), Fabiano Schivardi () and Battista Severgnini ()
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Marco Leonardi: University of Milan
Rossella Mossucca: LearLab

No 12549, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the potential benefits and mechanisms of firms' political connections by analyzing the Italian experience, where, in the early nineties, Silvio Berlusconi, a rich TV tycoon, became the leader of the conservative political coalition. Using firm-level data, we find that the 101 companies supporting Berlusconi's successful bid to become prime minister did better than controls in terms of sales and employment but not of productivity. The results are confirmed when we instrument the decision to support Berlusconi with electoral outcomes in the 1921 elections. We also find suggestive evidence that the supporters' superior performance is stronger in sectors with high external financial dependence and high advertising intensity.

Keywords: political connections; productivity; policy regulation (search for similar items in EconPapers)
JEL-codes: G32 G38 D72 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-08
New Economics Papers: this item is included in nep-eur and nep-pol
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