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The Impact of Money in Politics on Labor and Capital: Evidence from Citizens United v. FEC

Author

Listed:
  • Akey, Pat
  • Babina, Tania
  • Buchak, Greg
  • Tenekedjieva, Ana-Maria

Abstract

We examine whether corporate money in politics benefits or hurts labor using the 2010 Supreme Court ruling Citizens United, which rendered bans on political election spending unconstitutional. In difference-in-difference analyses, affected states experience increases in both capital and labor income relative to unaffected states. We find evidence consistent with increased political spending spurring political competition and the adoption of pro-growth policies. These policies benefit a broader set of constituents as we find a broad-based increase in labor income. Affected states see increased political turnover and reduced regulatory burdens. The economic effects are stronger among ex-ante politically inactive and younger firms.

Suggested Citation

  • Akey, Pat & Babina, Tania & Buchak, Greg & Tenekedjieva, Ana-Maria, 2024. "The Impact of Money in Politics on Labor and Capital: Evidence from Citizens United v. FEC," CEPR Discussion Papers 18770, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18770
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    More about this item

    Keywords

    Labor and finance;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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