Political Screening: Theory and Evidence from the Argentine Public Sector

Politicians can bene…t by ensuring that public sector positions requiring political services are occupied by partisans. We study a model in which this political screening is achieved by varying the amount of required political services and associated compensation in otherwise similar positions. Past vote shares provide information on the population share of partisans, and we predict a U-shaped relationship between an employee’s salary and the incumbent politician’s vote share at the time of hiring. We test for this e¤ect using individual data from a large national income survey from Argentina, a country with widespread political patronage. Reduced form results are consistent with the model, showing that political conditions at the time of hiring have long-lasting e¤ects on public employees’wages. We use structural estimates of our model to quantify political patronage. Our results indicate that partisan employees earn an economically signi…cant premium of 18-19%. We thank Steve Craig, Chinhui Juhn, Péter Kondor, Andrea Szabó, Francesco Trebbi, Alex Whalley, and seminar participants at Rice University, SEA 2009, and MIEDC 2010 for comments and suggestions.