Gains from Early Support of a New Political Party

31 Pages Posted: 4 Sep 2019

See all articles by Marco Leonardi

Marco Leonardi

Università degli Studi di Milano; IZA Institute of Labor Economics

Rossella Mossucca

Einaudi Institute for Economics and Finance (EIEF)

Fabiano Schivardi

Luiss Guido Carli - Department of Economics and Finance; Einaudi Institute for Economics and Finance (EIEF); Centre for Economic Policy Research (CEPR)

Battista Severgnini

Copenhagen Business School

Abstract

We study the potential benefits and mechanisms of firms' political connections by analyzing the Italian experience, where, in the early nineties, Silvio Berlusconi, a rich TV tycoon, became the leader of the conservative political coalition. Using firm-level data, we find that the 101 companies supporting Berlusconi's successful bid to become prime minister did better than controls in terms of sales and employment but not of productivity. The results are confirmed when we instrument the decision to support Berlusconi with electoral outcomes in the 1921 elections. We also find suggestive evidence that the supporters' superior performance is stronger in sectors with high external financial dependence and high advertising intensity.

Keywords: political connections, productivity, policy regulation

JEL Classification: G32, G38, D72

Suggested Citation

Leonardi, Marco and Mossucca, Rossella and Schivardi, Fabiano and Severgnini, Battista, Gains from Early Support of a New Political Party. IZA Discussion Paper No. 12549, Available at SSRN: https://ssrn.com/abstract=3445815 or http://dx.doi.org/10.2139/ssrn.3445815

Marco Leonardi (Contact Author)

Università degli Studi di Milano ( email )

14 Via Vetere
20122 Milano
Italy
+39 02 58100384 (Phone)

IZA Institute of Labor Economics ( email )

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

Rossella Mossucca

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

Fabiano Schivardi

Luiss Guido Carli - Department of Economics and Finance ( email )

Viale Romania 32
Rome, Rome 00187
Italy

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Battista Severgnini

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
25
Abstract Views
267
PlumX Metrics