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Jobs Cronyism in Public-Sector Firms

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  • Martins, Pedro S.

Abstract

Politicians can use the public sector to give jobs to cronies, at the expense of the efficiency of those organisations and general welfare. In this paper, we regress monthly hires across all firms in Portugal with some degree of public ownership on the country's 1980-2018 political cycle. We find that public-sector appointments increase significantly over the months just after elections but only if the new government is of a different political colour than its predecessor. These results are consistent with a simple model of cronyism and hold in multiple robustness checks. Overall, we find our evidence to be consistent with politically-induced misallocation of public resources.

Suggested Citation

  • Martins, Pedro S., 2020. "Jobs Cronyism in Public-Sector Firms," GLO Discussion Paper Series 624, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:624
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    File URL: https://www.econstor.eu/bitstream/10419/222574/1/GLO-DP-0624.pdf
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    References listed on IDEAS

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    Cited by:

    1. Pedrini, Giulio & Cappiello, Giuseppe, 2022. "The impact of training on labour productivity in the European utilities sector: An empirical analysis," Utilities Policy, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Corruption; matched employer-employee panel data; public-sector employment;
    All these keywords.

    JEL classification:

    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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