Via Political Science Weblog: a paper presented last month at the Stanford Business School argues that those who signed the recall petition in Venezuela suffered economically as a result. They use the Maisanta database and then link those names to both national household survey and manufacturing firm data. It’s a really interesting (not to mention time consuming) way of getting some hard data.
Chang-Tai Hsieh, Edward Miguel, Daniel Ortega and Francisco Rodriguez (2007), “The Price of Political Opposition: Evidence from Venezuela’s Maisanta,” unpublished paper
Do individuals who join the political opposition pay an economic price? We study this question using unique information on individual political activity from Hugo Chávez’s Venezuela, the Maisanta database. The names of millions of pro-opposition supporters who signed recall petitions (seeking to remove Chávez from office) during 2002-2003, and the names of progovernment supporters who signed counter-petitions, were made public. Media accounts detail how this information has been utilized by both sides: by the Government to punish opposition supporters and firms, and by the overwhelmingly pro opposition private sector to discriminate against government supporters in hiring. After linking this political database to both national household survey and manufacturing firm data, we find that pro-opposition individuals experience significant drops in total earnings after 2003. There is extensive churning in the labor market: pro-opposition individuals disproportionately leave public sector employment and progovernment individuals leave private sector employment. Pro-opposition firms have falling total employment, less access to foreign exchange, and rising tax burdens (possibly due to selective audits). The misallocation of resources associated with political polarization between 1999-2004 contributed to a decline of 5% in TFP in our sample. To the extent other regimes can identify and punish the political opposition, these findings may help explain why dislodging authoritarian regimes often proves difficult in less developed countries.
There are all sorts of interesting tidbits in the paper:
This is evidence that Opposition supporters had deteriorating labor market outcomes after 2003. The magnitude is -3.8% of average pre-Maisanta income for opposition supporters, not a trivial effect (p. 15).
…
According to our results, a firm in which all board members signed against the opposition could expect to pay 0.5% in additional taxes as a fraction of total revenue relative to neutral and pro-government firms (Table 7). This is a very large effect since the average tax rate across all firms is a bit over 1%, so this implies an increase of almost 40% in taxes paid by pro-opposition firms” (p. 19).
Since it is not common to see empirical analyses about this topic, I would love to see a rebuttal by an economist with access to the same data.
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