Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202544 
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 2017-09
Publisher: 
Bar-Ilan University, Department of Economics, Ramat-Gan
Abstract: 
This paper addresses the effects of the revolving door phenomenon on the inequality of influence among firms. It shows that firms are not equal in their capacities to benefit from state connections. We first develop a theoretical model introducing the notion of "bureaucratic capital" and showing how the revolving door generates inequality in bureaucratic capital and in profits leading to inequality of influence. Then, this prediction is tested on a new database tracking the revolving door process involving the 20 biggest US commercial banks. We show that regulators who have created a large stock of "bureaucratic capital" are more likely to be hired by the top five banks after leaving public office. We then develop indices of the inequality of influence between banks. We show that banks in the top revenue quintile concentrate around 80% of the stock of revolvers. Goldman Sachs appears as the prime beneficiary of this process, by concentrating almost 30% of the revolving door phenomenon.
Subjects: 
regulators
revolving door
rent-seeking
state connections
bureaucratic capital
inequality of influence
connected firms
corruption
unethical behavior
JEL: 
D73
G01
G18
L51
Document Type: 
Working Paper

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