Like Father, Like Son? How Political Dynasties Affect Economic Development (JOB MARKET PAPER)

Abstract:

Politics is one of the most dynastic occupations in modern democratic countries. This paper studies how political dynasties affect economic development, using India as a laboratory. We present 3 results: first, using detailed biographical data on all Indian legislators since the colonial period, we show that politicians with a son are twice as likely to establish a dynasty. We use the gender composition of past incumbents' kids as an instrument for each village's exposure to dynastic rule, and find that dynastic rule reduces earnings, asset ownership and public good provision. Second, we isolate founder and descendant effects using constituency boundary changes and a close elections RD design. We find that founders have positive effects on development while descendants have negative effects. Third, we show that selection and incentives explain founder and descendant performance. Founders are positively selected and perform better just before their descendants enter politics, suggesting bequest motives. Direct descendants perform worse than in-laws, and descendants perform worse when their constituency has greater overlap with their father's. These 3 stylised facts are consistent with a simple political agency model where descendants inherit both ability and private electoral advantage, which creates career concerns incentives for founders and moral hazard for descendants. 
Last updated on 09/22/2018