not tied to specific transactions, then, to capture a broader, everyday level of required bribery.

# _<u>Firm size</u>_

The importance of firm size follows directly from the political budget constraint laid out in Section 2.1; this is put succinctly by Salamon and Siegfried (1977), “What makes the absolute size of available resources, and hence firm size, so important politically is the fact that political involvement has certain fixed costs attached to it...” (p. 1031). Public visibility and status as a larger employer tends to go hand-in-hand with greater firm size (see early work from Salamon and Siegfried (1977) and also, e.g., Chong and Gradstein (2010)). At the same time, it is not clear that influence follows from firm size and not the other way around. For example, Bertrand et al. (2018) document that politically connected firms in France disproportionately hire workers to hold favor with local politicians.

The ES include information on full-time, permanent employment at the end of the previous fiscal year, as well as information on temporary (or seasonal) employees and their average duration of employment. We use a measure that includes both permanent, full-time employees in addition to the permanent, fulltime equivalent of these temporary workers.

# _Descriptive statistics of items_

Table 1 shows the mean values of the main political interactions in our model (the items). These are produced first by computing a survey-weighted average by economy and then taking the simple average across the 41 economies. The final two columns also show the minimum and maximum values at the economy level (i.e., the economy-level average that is lowest and highest, respectively). Our measure of political connections has a mean value of just under 5%, ranging from an economy-level average of just under 1% (Italy) to a notably high average of 28% (Tunisia). Both corruption measures have economylevel minimums at 0%, with maximums above a third of firms for both measures.<sup>22</sup> Membership in a business association averages at nearly 4 in 10 firms, with a minimum of 9% (Armenia) and a maximum of near universal membership in Croatia.<sup>23</sup> The share of firms finding their business association’s lobbying as useful is 15%, with a minimum in Lithuania of under 3% and a maximum over 60% in the Arab Republic of Egypt.<sup>24</sup> The vast majority of firms, unsurprisingly, have no government ownership: in several economies the mean level of state ownership is 0, with an average level of government ownership in Belarus over 7%.<sup>25</sup> Overall, the average firm size is approximately 15 employees, and this average is lowest in Poland (9 workers) and highest in Azerbaijan (nearly 23 workers).

> 22Estonia and Malta have the lowest averages for the transactional and general corruption measures, respectively; while Ukraine and Morocco report the highest averages.

> 23This reflects the compulsory membership requirement in, for instance, the Croatian Chamber of Economy.

> 24This indicator takes a value of 1 if firms rate their business association’s lobbying as ‘somewhat’ or ‘very useful’. If a firm does not belong to a business association, it is coded a 0.

> 25In Armenia, Azerbaijan, Bulgaria, the Czech Republic, Estonia, Georgia, Jordan, Lebanon, Lithuania, and Portugal the average is 0%.

13