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Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament

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  • Diegmann, Andre
  • Pohlan, Laura
  • Weber, Andrea

Abstract

We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset to measure connections between politicians and the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. The economic effects are mediated by better credit ratings while access to subsidies or procurement contracts are documented to be of lower importance

Suggested Citation

  • Diegmann, Andre & Pohlan, Laura & Weber, Andrea, 2024. "Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament," CEPR Discussion Papers 19119, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19119
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    Cited by:

    1. is not listed on IDEAS
    2. Di Addario, Sabrina & Feng, Zhexin & Serafinelli, Michel, 2024. "Inventors' Coworker Networks and Innovation," IZA Discussion Papers 17398, Institute of Labor Economics (IZA).
    3. repec:ces:ceswps:_11432 is not listed on IDEAS
    4. Simon Luechinger & Mark Schelker & Lukas Schmid, 2025. "Do Firms Hire Politicians as Directors? Evidence from Close Elections," CESifo Working Paper Series 12019, CESifo.

    More about this item

    Keywords

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    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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