Competence, loyalty & exit evidence from Iranian provinces

Theocharis Grigoriadis and Shahrzad Shahmohammadi

No 2026/14, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: We study the political careers of provincial governors in Iran and ask whether competence and loyalty shape the risk of exit from office. Using province-year panel data with province and year fixed effects, we implement two IV strategies to address selection into hard postings and measurement error. To identify competence, we use a shift-share (Bartik) "merit shifter" that interacts predetermined provincial exposure to oil-linked fiscal capacity with national oil-price movements, generating plausibly exogenous variation in measured performance across provinces over time. To identify loyalty, we instrument parliamentary turnout with election-year voting-cost shocks: election-day temperature (and nonlinear transformations) interacted with an election-year indicator, which shifts participation when voting is salient but is orthogonal to governor retention decisions conditional on fixed effects and controls. Our estimates show that higher instrumented competence increases the probability of exit, especially along the rotation margin, while loyalty has weaker and less stable effects once endogeneity is addressed. We explain the competence-exit link through a performance-driven rotation model: the center deploys high performers to difficult provinces and then reassigns them quickly once acute constraints are relieved. In that sense, crisis posts are designed for short tenures ("send Ç fix Ç move"). An alternative discipline mechanism may suggest that competent governors face removal when their actions threaten entrenched interests. Nevertheless, this mechanism receives less consistent support in baseline specifications. Identification is strong for competence (weak-IV-robust tests reject the null), and the core findings are stable across aligned specifications. Substantively, the evidence suggests that managerial capacity is leveraged intensively rather than rewarded with tenure, underscoring the importance of distinguishing rotation from punishment in authoritarian personnel management.

Keywords: provincial governance; competence; loyalty; regime legitimacy; authoritarian personnel management; Iran (search for similar items in EconPapers)
JEL-codes: C23 D72 D73 H77 O53 P16 P26 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:342460

DOI: 10.17169/refubium-52114

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