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The Value of Political Capital: Dictatorship Collaborators as Business Elites

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  • Felipe Gonz√°lez
  • Mounu Prem

Abstract

What is the value of political capital for individuals? Towards the end of the Pinochet dictatorship in Chile, military and civilian collaborators entered the business elite, controlling the largest and most important firms in the country. Using a novel panel dataset of board members in these firms, we document a work premium for those who had previously collaborated with Pinochet. After democratization, however, collaborators were removed from boards and their compensation premium disappeared, suggesting that the value of their networks depreciated.To shed light on these findings, we study military personnel before, during, and after Pinochet and find evidence of a wage premium only during the dictatorship. We interpret these results as Pinochet favoring his collaborators while he was in power.

Suggested Citation

  • Felipe Gonz√°lez & Mounu Prem, 2018. "The Value of Political Capital: Dictatorship Collaborators as Business Elites," Documentos de Trabajo 15980, Universidad del Rosario.
    • Handle: RePEc:col:000092:015980
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    1. repec:osf:socarx:gz934_v1 is not listed on IDEAS
    2. Gonzalez, Felipe & Prem, Mounu & von Dessauer, Cristine, 2023. "Empowerment or Indoctrination? Women Centers Under Dictatorship," SocArXiv 64mf9, Center for Open Science.
    3. Aldunate, Felipe & Gonzalez, Felipe & Prem, Mounu, 2021. "Make the Economy Scream? U.S. Banks and Foreign Firms During the Cold War," SocArXiv bhwk7, Center for Open Science.
    4. repec:osf:socarx:z8f4h_v1 is not listed on IDEAS
    5. He, Chao & Kryzanowski, Lawrence, 2024. "Political connections, corruption, and investment decisions of Chinese mutual funds," The British Accounting Review, Elsevier, vol. 56(5).
    6. repec:osf:socarx:bhwk7_v1 is not listed on IDEAS
    7. Aldunate, Felipe & González, Felipe & Prem, Mounu, 2024. "The limits of hegemony: U.S. banks and Chilean firms in the Cold War," Journal of Development Economics, Elsevier, vol. 166(C).
    8. Chao He & Lawrence Kryzanowski & Yunfei Zhao, 2023. "Political connections of Chinese fund management companies and fund performance," The Financial Review, Eastern Finance Association, vol. 58(3), pages 597-627, August.
    9. Aldunate, Felipe & Gonzalez, Felipe & Prem, Mounu, 2022. "The Limits of Hegemony: Banks, Covert Actions, and Foreign Firms," SocArXiv z8f4h, Center for Open Science.
    10. Felipe González & Mounu Prem, 2020. "Losing your dictator: firms during political transition," Journal of Economic Growth, Springer, vol. 25(2), pages 227-257, June.
    11. Gonzalez, Felipe & Prem, Mounu, 2021. "The Legacy of the Pinochet Regime," SocArXiv v5yjf, Center for Open Science.
    12. Gonzalez, Felipe & Coy, Felipe & Prem, Mounu & von Dessauer, Cristine, 2022. "Uncertainty from dictatorship to democracy: Evidence from business communications," SocArXiv gz934, Center for Open Science.

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