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Do Political Connections Reduce Job Creation? Evidence from Lebanon

Author

Listed:
  • Ishac Diwan

    (Center for International Development at Harvard University)

  • Jamal Ibrahim Haider

    (Center for International Development at Harvard University)

Abstract

Using firm-level census data, we determine how politically-connected firms (PCFs) reduce job creation in Lebanon. After observing that large firms account for the bulk of net job creation, we find that PCFs are larger and create more jobs, but are also less productive, than non-PCFs in their sectors. On a net basis, at the sector-level, each additional PCF reduces jobs created by 7.2% and jobs created by non-PCFs by 11.3%. These findings support the notion that politically-connected firms are used for clientelistic purposes in Lebanon, exchanging privileges for jobs that benefit their patrons’ supporters.

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Handle: RePEc:glh:wpfacu:75
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More about this item

Keywords

job creation; politically-connected firms; clientelism; Lebanon;
All these keywords.

JEL classification:

  • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
  • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
  • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
  • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
  • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

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