Electoral Vulnerability and Subsidized Small Business Lending: Evidence from Gerrymandering
60 Pages Posted: 7 Jun 2019 Last revised: 2 Oct 2019
Date Written: May 30, 2019
We study how electoral competition affects government-subsidized small business loans to congressional districts. To identify the causal impact of electoral competitiveness, we examine politically-motivated congressional redistricting ("gerrymandering") and exploit the discontinuity in post-redistricting electoral competitiveness between districts where redistricting party incumbents narrowly won and narrowly lost the pre-redistricting election. Using a regression discontinuity design, we find that districts with electorally vulnerable Congressional Representatives receive more Small Business Administration (SBA) loans than districts with more entrenched Representatives, and this leads to higher local employment and wage growth in the short run.
Keywords: small business loans, political competition, gerrymandering, redistricting, employment growth
JEL Classification: P16, H81, G28, D72
Suggested Citation: Suggested Citation