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Politics and the Labor Market: The Role of Frictions


  • Luigi Bonaventura
  • Andrea Consoli
  • Matteo Richiardi
  • Salvo Spagano


We study how political intermediation in the labor market interacts with search frictions. Politicians create and control (to a certain extent) business opportunities for firms, hence the creation of new vacancies. But to compete for these vacancies workers have to give their support to politicians. This leads to a fragmentation of the labor market, where politicians act as mediators between demand and supply. We show that in presence of information asymmetries (when non-aliated workers are not able to distinguish non-aliated firms, for which they are eligible, from aliated ones, for which they are not eligible) the impact of political intermediation is U-shaped, and can more than double the resulting unemployment rate.

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  • Luigi Bonaventura & Andrea Consoli & Matteo Richiardi & Salvo Spagano, 2006. "Politics and the Labor Market: The Role of Frictions," LABORatorio R. Revelli Working Papers Series 53, LABORatorio R. Revelli, Centre for Employment Studies.
  • Handle: RePEc:cca:wplabo:53

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    References listed on IDEAS

    1. Laura Pagani, 2003. "Why Do People from Southern Italy Seek Jobs in the Public Sector?," LABOUR, CEIS, vol. 17(1), pages 63-91, March.
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    6. Goncalves Veiga, Linda & Chappell, Henry W, Jr, 2002. "Politics and Unemployment in Industrialized Democracies," Public Choice, Springer, vol. 110(3-4), pages 261-282, March.
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    10. Lui, Francis T., 1986. "A dynamic model of corruption deterrence," Journal of Public Economics, Elsevier, vol. 31(2), pages 215-236, November.
    11. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
    12. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, vol. 90(1), pages 194-211, March.
    13. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    14. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
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