Political Alignment between Firms and Employees: The Role of Asset Specificity, job market paper, Download
- Abstract: When do political preferences of employees align with those of their employers? Comparative and International Political Economy scholars debate whether sectors, firms, or occupations matter more for political preference formation. While some empirical research confirms the impact of sectoral or firm specificity others highlight occupational skill specificity. I provide evidence on firm-employee alignment from a new dataset of 1,691,790 campaign contribution filings by 85,109 employees working in 874 publicly listed firms, using US campaign finance data between 2003 and 2016. I find that employees in companies and sectors with more asset specificity are more aligned with their employer, but no evidence for the impact of occupational skill specificity. I also show that employees donate more to candidates once their employers start donating to the same candidates, providing a mechanism for firm-employee alignment. This paper highlights the important role of corporations in shaping individual political preferences and participation.
Political Uncertainty and Trade in Intermediate and Capital Goods: Evidence From Ukrainian Firms, with Oleksandr Shepotylo, under review, Download
- Abstract: We explore the effects of policy uncertainty on firm-level trade and introduce a new method to measure uncertainty using machine learning tools for quantitative text analysis. We extend a model with heterogeneous firms and sunk investments by adding intermediate inputs to derive hypotheses about the impact of trade policy uncertainty (TPU) on firm’s decision to import intermediate and capital goods. We look at Ukraine’s trade relations with EU and Russia to measure TPU and test predictions of our model. Ukrainian firms faced considerable uncertainty with regards to two mutually exclusive trade policies: the conclusion of a free trade agreement with the European Union (EU FTA) or a customs union with Russia (RU CU). Using unique firm-product-destination level data from Ukrainian manufacturing firms between 2003 and 2014, we find a substantive increase in firm-level exports to and imports from EU countries, once uncertainty with regards to the EU FTA is reduced. In line with our expectations, more protected goods, intermediates, and capital goods respond stronger to the reduction in TPU. The novel measure of uncertainty can be easily applied to other cases where governments face multiple mutually exclusive policy options.
Political Alignment between Firms and Employees and Lobbying Effectiveness, work in progress
- Abstract: Does political alignment between firms and employees affect lobbying effectiveness of firms? Existing theoretical models lead to opposite theoretical expectations. Collective action theory would predict that more politically cohesive firms will be more likely to lobby and hence, be more effective in achieving their political goals. However, from an investment theory perspective firms which split donations equally between parties would lobby more effectively, hedging their bets in the case of political change. I theorize that politically aligned companies will be more likely to overcome collective action problems and engage in lobbying in the first place, but that companies splitting donations between parties will be more effective in getting preferred legislation passed, on average. I test these expectations using linked US campaign finance and lobbying data between 1999 and 2016. First, I match campaign donations of firms and employees to bill-level lobbying activity of the same companies. Second, I test the impact of alignment on the number of bills lobbied and the likelihood of bill passage. The paper reconciles collective action and investment theory perspectives on corporate political activity and provides an empirical contribution by linking large-scale data on lobbying and campaign donations at the firm-level.