Essays on Empirical Political Economy

Garro Beraza, Haritz

doi:https://doi.org/10.21985/n2-m9zt-d344

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Essays on Empirical Political Economy

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This dissertation contains three essays. In the first essay, "The Role of Connections in Congressional Lawmaking", I investigate the role of connections in congressional lawmaking by studying how legislators' deaths impact their peers' capacity to sponsor and advance bills in the U.S. House of Representatives. I focus on legislators who represent the same states as deceased legislators: these lawmakers collaborated with the deceased more closely, but are otherwise comparable to all other lawmakers. Following the death of a legislator from the same state, lawmakers suffer a 22% decrease in their effectiveness. Bills sponsored by these lawmakers are less likely to receive action in committee, and fewer of them become law as a result. The effects are especially large after the deaths of committee chairs. In the second essay, "Political Consequences of Economic Hardship: State Economic Activity and Polarization in American Legislatures", I analyze how the economy affects legislative polarization. Using recently available state legislator ideal point estimates, I find a strong negative relationship between state economic activity and political polarization. States that fared worse economically have experienced greater increases in political polarization. I establish this correlation as causal by employing an instrumental variables strategy. The instrument isolates exogenous variation in state economic activity by exploiting time series variation in oil prices, which differentially affects individual states according to their economic dependence on oil production. The estimated polarization effects are stronger for Republicans. The findings have implications for understanding the interaction between the economy and political outcomes. In the third essay, "Quid Pro Quo? Corporate Returns to Campaign Contributions" (joint work with Anthony Fowler and Jörg Spenkuch), we study whether corporations distort public policy and subvert the will of the electorate by donating to politicians. Well-publicized anecdotes notwithstanding, whether and how much corporations actually benefit from supporting political candidates remains unknown. To systematically address this question, we utilize two complementary empirical approaches that isolate the monetary benefits a company derives from a favored candidate winning office. First, we use a regression discontinuity design exploiting close congressional, gubernatorial, and state legislative elections. Second, we leverage within-campaign changes in market beliefs about the outcomes of U.S. Senate races. We find no evidence that corporations benefit from electing candidates supported by their PACs, and we can statistically reject effect sizes greater than 0.3 percent of firm value. Our results suggest that corporate campaign contributions do not buy significant political favor---at least not on average.

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