Chen, Maggie (2009): The Matching of Heterogeneous Firms and Politicians.
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We use a Chinese firm-director level panel dataset to examine the matching of heterogeneous firms and politicians. Based on 36,308 detailed biographies, we identify individuals that previously held bureaucratic positions and classify the rank of each position in the Chinese political hierarchy. Using this direct measure of political capital, we examine how firms with heterogeneous productivity match with politicians with different political strength. Our results indicate a positive assortative matching in the political markets. More productive firms recruit more powerful politicians. Further, the preference for political capital relative to conventional human capital increases in firms' dependence on external financing and decreases in the efficiency of local governments. Conditional on the endogenous matching, new hires with greater political strength receive more compensation than their co-workers in the same cohort. The marginal effect of a one-step rise in the political ladder exceeds the marginal effect of raising education attainment from, for example, high school to college.
|Item Type:||MPRA Paper|
|Original Title:||The Matching of Heterogeneous Firms and Politicians|
|English Title:||The Matching of Heterogeneous Firms and Politicians|
|Keywords:||firm heterogeneity, politician, political hierarchy, matching|
|Subjects:||D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
|Depositing User:||Maggie Chen|
|Date Deposited:||27. Jun 2010 02:50|
|Last Modified:||12. Feb 2013 22:47|
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