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The Dynamics of Firm Lobbying

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  • William R. Kerr
  • William F. Lincoln
  • Prachi Mishra

Abstract

We study the determinants of the dynamics of firm lobbying behavior using a panel data set covering 1998-2006. Our data exhibit three striking facts: (i) few firms lobby, (ii) lobbying status is strongly associated with firm size, and (iii) lobbying status is highly persistent over time. Estimating a model of a firm's decision to engage in lobbying, we find significant evidence that up-front costs associated with entering the political process help explain all three facts. We then exploit a natural experiment in the expiration in legislation surrounding the H-1B visa cap for high-skilled immigrant workers to study how these costs affect firms' responses to policy changes. We find that companies primarily adjusted on the intensive margin: the firms that began to lobby for immigration were those who were sensitive to H-1B policy changes and who were already advocating for other issues, rather than firms that became involved in lobbying anew. For a firm already lobbying, the response is determined by the importance of the issue to the firm's business rather than the scale of the firm's prior lobbying efforts. These results support the existence of significant barriers to entry in the lobbying process.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17577.

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Date of creation: Nov 2011
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Publication status: published as Kerr, William R., William F. Lincoln, and Prachi Mishra. "The Dynamics of Firm Lobbying." American Economic Journal: Economic Policy (forthcoming).
Handle: RePEc:nbr:nberwo:17577

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Cited by:
  1. Lange, Ian & Polborn, Sarah, 2012. "Can lobbying encourage abatement? Designing a new policy instrument," Stirling Economics Discussion Papers 2012-03, University of Stirling, Division of Economics.
  2. William R. Kerr, 2014. "U.S. High-Skilled Immigration, Innovation, and Entrepreneurship: Empirical Approaches and Evidence," WIPO Economic Research Working Papers 16, World Intellectual Property Organization - Economics and Statistics Division.
  3. Jennifer Abel-Koch, 2013. "Endogenous Trade Policy with Heterogeneous Firms," Working Papers 1306, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 01 Aug 2013.
  4. Sari Pekkala Kerr & William R. Kerr & William F. Lincoln, 2014. "Skilled Immigration and the Employment Structures of U.S. Firms," William Davidson Institute Working Papers Series wp1071, William Davidson Institute at the University of Michigan.
  5. Kammerer, Hannes, 2013. "Lobbying for Subsidies with Heterogeneous Firms," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79767, Verein für Socialpolitik / German Economic Association.

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