Corporate Political Influence and Workforce Mobilization: The Role of Monopsony Power
P9-S237-3
Presented by: Alberto Parmigiani
Recent research has highlighted the growing capacity of firms in mobilizing their workforce and directing their political preferences toward favored candidates. However, there is a scarcity of knowledge regarding the factors explaining firms' ability to mobilize their employees. In this paper, we argue that firms possessing elevated monopsony power also exhibit a heightened capacity to mobilize their workforce, capitalizing on the constrained external opportunities available to their employees. First, we present descriptive evidence, illustrating that in firms with greater monopsony power, there exists a higher probability of political alignment between the firm and its workforce, measured through campaign donations of workers and firms. Then, we employ mergers in a difference-in-differences event study design to estimate the causal impact of monopsony power on political mobilization. We use mergers because they are commonly associated with an increase in monopsony power and they are arguably unrelated to the political preferences of their workforce. Finally, we look at policy outcomes such as members of Congress votes on relevant issues for the corporate sectors, investigating whether the political mobilization of workers in large industries in their constituencies influence their legislative decisions. In this regard, we aim to study whether headquarters of large corporations with substantial political clout in Congressional districts influence the behavior of elected representatives.
Keywords: monopsony power; political influence; corporate donations; Congress