PATRONAGE IN THE ALLOCATION OF PUBLIC SECTOR JOBS

This paper studies patronage – the use of public sector jobs to reward political supporters of the party in power – in Brazilian local governments. We use longitudinal data on the universe of Brazilian public sector employees over the 1997-2014 period, matched with information on more than 2,000,000 political supporters of Brazilian local parties. Using a regression discontinuity design that generates exogenous variation in individuals’ connection to the party in power, we first document the presence of significant political favoritism in the allocation of jobs throughout the entire Brazilian public sector hierarchy. Being a political supporter of the party in power increases the probability of having a public sector job by 10.5 percentage points (a 47% increase). Leveraging detailed information on supporters’ and jobs’ characteristics, we then show that patronage is the leading explanation behind this favoritism, with jobs in the public sector being used as reward for political supporters. We find that patronage has significant real consequences for selection to public employment, as the amount of support provided to the party in power substitutes qualifications as determinant of hiring decisions. Finally, consistent with this negative impact on the quality of the selected public workers, we present evidence suggesting that patronage practices are associated with a worse provision of public services. We thank Alberto Alesina, Horacio Larreguy, Nathan Nunn and Andrei Shleifer for extensive advice and guidance throughout this project. We also thank Edoardo Acabbi, Mitra Akhtari, Nick Bloom, Emily Breza, Katherine Casey, Arun Chandrasekhar, Erika Desserranno, Livio Di Lonardo, Pascaline Dupas, Marcel Fafchamps, Claudio Ferraz, Sid George, Xavier Jaravel, Asim Khwaja, Michael Kremer, Elisa Maffioli, Luca Maini, Davide Malacrino, Eduardo Montero, Diana Moreira, Rohini Pande, Matteo Paradisi, Gautam Rao, Mark Rosenzweig, Raul Sanchez de la Sierra, Jeff Weaver, seminar participants at Harvard and Stanford University, and conference participants at EMCON (Northwestern 2016), LACEA-LAMES (Medellin 2016), PACDEV (UC Riverside 2017), DEVPEC 2017, and Ridge Lacea (Rio de Janeiro 2017) for helpful comments and suggestions. We are grateful to Mitra Akhtary, Diana Moreira and Laura Trucco for sharing data on students’ test scores in municipal schools. Tairis Machado and Naoko Yatabe provided excellent research assistance. Teso and Colonnelli are grateful to The Pershing Square Fund for Research on the Foundations of Human Behavior for generous support. Teso gratefully acknowledges financial support from an IQSS Graduate Student Seed Grant. Colonnelli gratefully acknowledges financial support from the Stanford Institute for Innovation in Developing Economies (SEED), and from the Private Enterprise Development in Low-Income Countries Initiative by the Centre for Economic Policy Research (CEPR) and the Department For International Development (DFID). All remaining errors are our sole responsibility. ‹PhD candidate, Department of Economics, Stanford University. emacol@stanford.edu. ;PhD candidate, Department of Economics, Harvard University. eteso@fas.harvard. edu. ;Adjunct Professor, Department of Economics, Universidad del Rosario. francisco.munoz@urosario.edu. 1 PATRONAGE IN THE ALLOCATION OF PUBLIC SECTOR JOBS 2