The Dynamics of Firm Lobbying
William R. Kerr
Harvard University - Entrepreneurial Management Unit
William Fabius Lincoln
University of Michigan at Ann Arbor - College of Literature, Science & the Arts
International Monetary Fund (IMF) - Research Department
October 31, 2011
Harvard Business School Entrepreneurial Management Working Paper No. 12-034
We study the determinants of the dynamics of firm lobbying behavior using a panel data set covering 1998-2006. Our data exhibit three striking facts: (i) few firms lobby, (ii) lobbying status is strongly associated with firm size, and (iii) lobbying status is highly persistent over time. Estimating a model of a firm’s decision to engage in lobbying, we find significant evidence that up- front costs associated with entering the political process help explain all three facts. We then exploit a natural experiment in the expiration in legislation surrounding the H-1B visa cap for high-skilled immigrant workers to study how these costs affect firms’ responses to policy changes. We find that companies primarily adjusted on the intensive margin: the firms that began to lobby for immigration were those who were sensitive to H-1B policy changes and who were already advocating for other issues, rather than firms that became involved in lobbying anew. For a firm already lobbying, the response is determined by the importance of the issue to the firm’s business rather than the scale of the firm’s prior lobbying efforts. These results support the existence of significant barriers to entry in the lobbying process.
Number of Pages in PDF File: 45
Keywords: lobbying, political economy, immigration, H-1B
JEL Classification: D72, D73, D78, F22, F23, J61, O31, O38working papers series
Date posted: January 3, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo6 in 0.437 seconds