Do politicians with business backgrounds influence local business environment? evidence from brazilian municipalities

Abstract

Recently, businesspeople have been succesfull in elections around the world. Although part of their speech and racing campaigns are related to pro-business policies, little is known about the impact of their elections on the business environment. This work investigates the impacts of electing candidates with business experience on the number of companies and employees, and in wages and workforce characteristics, in Brazilian municipalities. Close electoral races were explored using a regression discontinuity (RD) design. The results obtained indicate that there is no effect on the aggregate number of companies and formal employees, but there are heterogeneous effects by sizes of both companies and municipalities and also by sectors of activity. Regarding the workforce characteristics, there is an increase of 5-7 % in wages, driven by the industry and services sectors, and a small improvement in the educational level of workers in services and agriculture. These results, however, are not significant when separating municipalities by size.