Principal investigator: Eduarda Miller de Figueiredo
Paper title: Patronage and Selection in Public Sector Organizations
Location of the Intervention: Municipalities of Brazil
Sample Size: 1.057.216 campaign donors and 1.031.083 candidates.
Sector: Politics
Primary Variable of Interest: Supporter's job market results
Type of Intervention: Campaign donation
Methodology: Discontinuous Regression
In the public sector, there is a practice of using public sector jobs as a way to reward supporters of political parties. Municipalities employ the largest share of public sector employees, who can be discreetly selected by politicians for appointed and trusted positions. Seeking to empirically investigate whether discretion in public employment decisions is used as a patronage tool, a regression discontinuity was performed with a data sample comprising the elections from 1997-2014. With data for 1.057.216 campaign donors and 1.031.083 candidates, the results showed that supporters of the winning party are 10,5 percentage points more likely to have a public sector job in the post-election period.
Policy Problem
The quality of individuals in the public sector is a crucial determinant of government performance, thus making it essential to identify and quantify the frictions in the process by which governments select public employees (Finan, Olken, and Pande, 2015). And, although there are rigid civil service systems, politicians maintain discretion regarding selection, which allows them to select capable and motivated individuals to perform the work, or to engage in clientelistic practices (Grindle, 2012). Clientelism being the practice where public sector jobs are used to reward supporters of political parties.
Therefore, this article seeks to empirically investigate whether discretion in public employment decisions is used as a tool for patronage and the consequences for the selection process.
Implementation and Evaluation Context
In Brazil, 5.570 municipalities are governed by a mayor elected every four years. These elections also include voting for the City Council. Campaign donors can donate up to 10% of their gross annual income, and are required to submit a detailed breakdown of all contributions received by the candidates to the Electoral Court.[1].
Municipalities are responsible for providing public goods in the areas of education, health, and transportation (Souza, 2002). As a result of thisMunicipalities employ the largest share of public sector workers: 56% in 2014.These employees can be selected through: (i) public competitions; (ii) appointed positions; (iii) positions of trust; and (iv) temporary jobs. These appointed and positions of trust allow for discretion on the part of politicians during the selection process.
Policy/Program Details
In the study, the authors focus on two groups of supporters of local political parties: (i) candidates for City Council who are associated with a specific party, which are usually part of an electoral coalition; (ii) individual campaign donors.
In the 2008 and 2012 elections, the average share of total donations from individuals was 28% for mayoral candidates and 40% for city council candidates.
The authors seek to conduct empirical tests to show that:
- Political connections are a determining factor in hiring in public sector organizations;
- Sponsorship is an important mechanism;
- Political considerations lead to the selection of less competent individuals.
For this study, the authors combined the database of the Annual Social Information Report (RAIS), which focuses on employee-level data, and the database of the Superior Electoral Court (TSE), which contains information on politicians, elections, and campaign donors. The data used covers the period from 1997 to 2014.
Thus, the final sample includes 1.057.216 campaign donors and 1.031.083 candidates. This data allowed the authors to track all the career paths in the labor market of supporters from different parties, as well as to analyze the role of political connections at all levels of the public hierarchy.
Method
For this study, a regression discontinuity model was used. Within a specific municipal election, the authors compared the careers of supporters of the winning party to those of the second-place party. And, since the choice of who to support is not random, they focused on elections where the margin of victory between the parties was small (a difference of up to 5 percentage points).
The dependent variable in the regression used is the labor market outcome for the supporter who endorses the party's mayoral candidate in that year's election. Fixed period-municipality-year effects were added as controls.
The authors emphasize that, although it is known that sponsorship is a secret, an illegal agreement between the parties, and that it is difficult to isolate its magnitude, the data allowed for the empirical tests necessary for the study to be carried out (Olken and Panda, 2012; Banerjee, Hanna and Mulainathan, 2013).
Thus, it was possible to estimate the impact of supporting the winning party on the likelihood of being employed in the public sector and on total annual income in the four years following the election.
Main results
The results show that supporters of the winning party are 10,5 percentage points more likely to have a job in the public sector in the post-election period: a 47% higher probability than donors to the second-placed party. Where higher employment probabilities translate into significant increases in total earnings, 34% for candidates and 10% for donors. As can be seen in Figure 1, there is a discontinuous jump in the probability of public sector employment, both for candidates and donors.
Furthermore, the results demonstrated a large and statistically significant effect for jobs such as doctor, school principal, public hospital director, community health worker, construction operations supervisor, and other occupations that require specific skills.
Figure 1: Effect of support for the winning party on the probability of public employment.
The authors emphasize that the findings show a picture where discretion in hiring is used as a political tool, in which even the presence of civil service may not be enough to protect public jobs from influence.
Furthermore, no effect was found on the probability of obtaining a job over which the mayor has no direct influence. In other words, all documented effects are driven by jobs over which the mayor has discretionary power.
Another investigation carried out in the study was to observe whether long-term supporters of the mayor's party are more likely to benefit from the allocation of public jobs than short-term supporters. The rationale for this test is to analyze whether ideology and loyalty to the party representative are important; thus, those loyal to the party should benefit more when the party is in power. However, this hypothesis was not confirmed, as there are small differences in the estimated effects for these subsamples.
Analyzing estimates for supporters of parties that lose both elections, the results suggest that supporters of the party that remains in power in both elections have a higher probability of public sector employment that persists beyond the Year 4 election. In contrast, supporters whose party loses in the subsequent election see a sharp drop in the probability of public sector employment after the Year 4 election. In other words, these patterns show that public sector jobs allocated to supporters are deeply linked to the fortunes of their party.
Figure 2: Sponsorship and Turnover in the Municipal Public Sector
Figure 2 further demonstrates that the turnover of public sector workers, both newly hired (Panel A) and those who leave (Panel B), increases around election time.
Lessons in Public Policy
Evidence suggests that this discretion in hiring can result in patronage. That is, public sector jobs may be used to reward campaign supporters (donors) of the political parties in power, replacing competence with political support as the determining factor in hiring decisions.
References
COLONNELLI, Emanuele; PREM, Mounu; TESO, Edoardo. Patronage and selection in public sector organizations. American Economic Review, v. 110, no. 10, p. 3071-99, 2020.
[1] Law No. 8.713/1993.
