Date of Award

Fall 2022

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Political Science

First Advisor

Maggi, Giovanni

Abstract

This dissertation contains three essays that employ causal identification strategies using novel observational data to study three substantive topics in political economy: in the first paper, I examine firm lobbying in the European Union, particularly the effects of lobbying on firms’ financial performance, EU Commission procurement and grant allocation across firms, and on regulatory benefits for companies. Secondly, I study the effects of firms’ political connections to state attorneys general in the US on investigation probabilities and firms’ investment. In the third essay (joint with Daniel Goldstein), I investigate the roles of citizens’ partisanship and social and political trust at shaping compliance with Covid-19 mitigation policies. Substantively, what unites the three essays are my interests in factors that shape public policy and public policy effectiveness. More detailed abstracts of the papers follow below. Firm Lobbying in the European Union The European Union (EU) Single Market is the largest internal market worldwide, and EU institutions have far-reaching competences, particularly regarding policies that pertain to the Single Market. Hence, the policy stakes in the EU are high, and a wide array of actors tries to exert influence at the EU level; companies play a prominent role in this process. Yet, a systematic empirical account of the determinants and effects of firm lobbying in the EU is lacking. I address this gap, and explore the following questions: which types of companies are lobbying, and what are the effects of firm lobbying in the EU? I leverage novel data on firms’ meetings with the EU Commission, and so provide an answer to the first question: larger, more profitable, and more valuable companies lobby more. Next, I show that lobbying leads to higher stock market value for the firms that lobby, employing an event study approach. Around meeting dates with EU Commission officials, firms experience cumulative abnormal returns (CARs) of between 0.3% and 0.5%. Exploiting the surprise outcome of the Brexit referendum in 2016, I employ a difference-in-differences design that indicates that firms’ connections to the EU Commission lost value when the UK decided to leave the EU. This further suggests that financial markets value firm lobbying in the EU. I then investigate the real-world benefits that companies receive from lobbying the EU Commission. Exploiting a three-dimensional panel with firm, year, and commissioner dimensions, I demonstrate that firm lobbying is associated with companies receiving higher grant amounts from the EU Commission. I argue for a causal interpretation of this finding based on an instrumental variable design that relies on the fact that companies are significantly more likely to lobby commissioners from their home countries. In a placebo check, I assess non-lobbying companies’ reduced form effects of shared company-commissioner nationality on EU Commission funding awards, and argue that a potential bias due to an exclusion restriction violation may be moderate at most. Lastly, I explore whether the detected effects from the realms of the stock market and EU Commission procurement and grant awards generalize to EU regulatory politics. I show that companies that met with commissioners before regulations were proposed experience greater CARs around regulation proposal dates and regulation adoption dates. Lobbying therefore may also grant firms regulatory benefits. I discuss the findings against the backdrop of the literature, and conjecture that lobbying in the EU context should not primarily be understood as quid-pro-quo lobbying. The EU features a relative absence of money in politics, and few cases of revolving doors; the provision of information and technical expertise on the other hand appear to play a larger role, which is why lobbying here may mainly be understood as informational. My results therefore more broadly imply that informational lobbying – which is often seen as a less distortive than quid-pro-quo lobbying - can lead to private gains for firms. Campaign Contributions, Political Connections, and Investment – Firm-Level Evidence from US State Attorney Elections In this paper, I consider the effects of firms’ connections to state attorneys general in the US. Legal investigations and penalties can pose a considerable risk and uncertainty for firms, and there is anecdotal evidence that political connections to the judicial branch may contribute to lowering such risk. Yet, extant literature has not focused on connections to that branch of government. I leverage state-level campaign contribution data and employ a regression discontinuity design around state attorneys general elections to provide suggestive evidence that political connections lead to lower investigation probabilities and lower penalties for firms. Moreover, I demonstrate that connections lead to increases in firms’ investments. Thus, I shed light on a new channel for firms’ political activities, and show that connections to the judicial branch entails private benefits for companies. The observed investment effects may be unfair and inefficient as capital may be misallocated across firms. Who Do You Trust? The Effects of Partisanship and Trust on Compliance with COVID-19 Orders [with Daniel A. N. Goldstein] Non-uniform compliance with public policy by citizens can undermine the effectiveness of government, particularly during crises. Mitigation policies intended to combat the novel coronavirus offer a real-world measure of citizen compliance, allowing us to examine the determinants of asymmetrical responsiveness. Analyzing county-level cellphone data, we leverage the staggered roll-out to estimate the causal effect of stay-at-home orders on mobility using a difference-in-differences strategy. We find movement is significantly curtailed, and examination of descriptive heterogeneous effects suggests the key roles that partisanship and trust play in producing irregular compliance. We find that Republican-leaning counties comply less than Democratic-leaning ones, which we argue underlines the importance of trust in science and acceptance of large-scale government policies for compliance. However, this partisan compliance gap shrinks when directives are given by Republican leaders, suggesting citizens are more trusting of co-partisan leaders. Furthermore, we find that higher levels of social trust increase compliance; yet, these gains attenuate or intensify depending upon community-level partisan sentiments. Our study provides a real-world, behavioral measure that demonstrates the influence of partisanship, social trust, and their interaction on citizen welfare. Finally, we argue our results speak to how trust in government may impact successful containment of the COVID-19 pandemic.

Download

Share

COinS