The Productivity Consequences of Political Turnover: Firm-Level Evidence from Ukraine's Orange Revolution

Forthcoming, American Journal of Political Science.

43 Pages Posted: 16 Jun 2013 Last revised: 6 Oct 2014

See all articles by John S. Earle

John S. Earle

George Mason University - Schar School of Policy and Government; IZA Institute of Labor Economics

Scott Gehlbach

University of Wisconsin-Madison

Multiple version iconThere are 2 versions of this paper

Date Written: September 2014

Abstract

We examine the impact of political turnover on economic performance in a setting of largely unanticipated political change and profoundly weak institutions: the 2004 Orange Revolution in Ukraine. Exploiting census-type panel data on over 7,000 manufacturing enterprises, we find that the productivity of firms in the regions most supportive of Viktor Yushchenko increased by more than 15 percentage points in the three years following his election, relative to that in the most anti-Yushchenko regions. We conclude that this effect is driven primarily by particularistic rather than general economic policies that disproportionately increased output among large enterprises, government suppliers, and private enterprises – three types of firms that had much to gain or lose from turnover at the national level. Our results demonstrate that political turnover in the context of weak institutions can have substantial distributional effects that are reflected in economic productivity.

Keywords: political turnover, firm productivity, political connections, property rights, Orange Revolution

JEL Classification: P23, P26, P31, P48

Suggested Citation

Earle, John S. and Gehlbach, Scott, The Productivity Consequences of Political Turnover: Firm-Level Evidence from Ukraine's Orange Revolution (September 2014). Forthcoming, American Journal of Political Science.. Available at SSRN: https://ssrn.com/abstract=2279787 or http://dx.doi.org/10.2139/ssrn.2279787

John S. Earle

George Mason University - Schar School of Policy and Government ( email )

3351 Fairfax Drive
MS 3B1
Arlington, VA 22201
United States
703-993-8023 (Phone)

HOME PAGE: http://earle.gmu.edu

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Scott Gehlbach (Contact Author)

University of Wisconsin-Madison ( email )

1050 Bascom Mall
Madison, WI 53706
United States
608-263-2391 (Phone)

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