Political Connections Reduce Job Creation: Firm-level Evidence from Lebanon

Ishac Diwan () and Jamal Haidar ()

MPRA Paper from University Library of Munich, Germany

Abstract: Using firm-level data, we document that politically connected firms (PCFs) create more jobs than unconnected firms in Lebanon. We observe, however, that the presence of PCFs in a sector is correlated with lower job creation. Although causality is difficult to establish due to endogeneity issues, we find that PCFs expand, and non-PCFs retract, more around elections. Our findings are consistent with the hypothesis that unfair competition by PCFs hurts unconnected competitors so much that aggregate employment growth in the sector is affected negatively.

Keywords: job creation; political connections; event study; competition (search for similar items in EconPapers)
JEL-codes: D02 D22 D47 J20 J38 J4 L22 L50 O43 P16 (search for similar items in EconPapers)
Date: 2020-10-26
New Economics Papers: this item is included in nep-ara
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Citations: View citations in EconPapers (2)

Published in Journal of Development Studies 57.8(2021): pp. 1373-1396

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Journal Article: Political Connections Reduce Job Creation: Firm-level Evidence from Lebanon (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:112109

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