Submission 80
Why Don'T You Get a Job? Evidence from Campaign Spending Limits
Panel.4-S-2
Presented by: Caique Melo
Regulations governing campaign finance play a central role in safeguarding the integrity of democratic institutions. Yet, despite their widespread adoption, little is known about how politicians adjust their behavior when financial constraints change and how these adjustments affect patterns of patronage. This paper examines how looser campaign spending limits shape the allocation of public-sector positions as rewards for political and financial support. To identify causal effects, I exploit two sources of exogenous variation: a Brazilian electoral reform that introduced municipality-specific spending ceilings, creating a discontinuity in permitted expenditures, and close elections that generate quasi-random variation in who holds office. Municipalities characterized by more permissive campaign spending provide politicians with greater resources, facilitating enhanced political patronage through discretionary appointments. By combining electoral data on municipal political alliances, detailed records on roughly 140,000 individual campaign donors, and comprehensive Brazilian administrative labor market records, I analyze the effect of the financial reform on the likelihood of campaign donors entering public-sector employment after the elections. I find that financial supporters of elected candidates experience a 33% increase in the likelihood of public sector employment in municipalities subject to looser spending caps. Further analysis shows that these appointments concentrate in low-skill positions, disproportionately benefit non-ideologically-aligned donors, and are more pronounced among term-limited mayors, indicating the extensive use of discretionary posts as a patronage tool.