The Price of Political Opposition: Evidence from Venezuela's Maisanta
34 Pages Posted: 11 Sep 2008 Last revised: 14 May 2009
Date Written: April 1, 2009
During 2002-2004, the identities of millions of Venezuelan voters who had signed petitions to recall President Hugo Chavez or opposition politicians from office were made public by the government. We match these petition signers to manufacturing firm owners and household survey respondents to measure the economic effects of political expression. Put simply, do individuals who join the political opposition pay an economic price? We find that pro-opposition individuals see a fall in their income and disproportionately leave public sector employment, while pro-government individuals leave private sector employment. Pro-opposition firms show rising tax burdens, falling profits, and less access to foreign exchange, while the marginal products of capital and labor in pro-government firms decreased. The misallocation of resources associated with political polarization after 2002 contributed to a 6% decline in TFP in our sample of firms.
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