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The Value of Political Capital: Dictatorship Collaborators as Business Elites

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  • Felipe González
  • 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.

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  • Felipe González & Mounu Prem, 2018. "The Value of Political Capital: Dictatorship Collaborators as Business Elites," Documentos de Trabajo 015980, Universidad del Rosario.
  • Handle: RePEc:col:000092:015980
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    Cited by:

    1. Felipe González & Mounu Prem, 2020. "Losing your dictator: firms during political transition," Journal of Economic Growth, Springer, vol. 25(2), pages 227-257, June.
    2. Gonzalez, Felipe & Prem, Mounu, 2021. "The Legacy of the Pinochet Regime," SocArXiv v5yjf, Center for Open Science.

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