The Mortality Cost of Political Connections

Raymond Fisman, Yongxiang Wang

NBER Working Paper No. 21266
Issued in June 2015
NBER Program(s):Corporate Finance, Development Economics, Law and Economics, Political Economy

We study the relationship between the political connections of Chinese firms and workplace fatalities. In our preferred specification we find that the worker death rate for connected companies is two to three times that of unconnected firms (depending on the sample employed), a pattern that holds for within-firm estimations. The connections-mortality relationship is attenuated in provinces where safety regulators' promotion is contingent on meeting safety targets. In the absence of fatalities, connected firms receive fewer reports of major violations for safety compliance, whereas in years of fatal accidents the rate of reported violations is identical. Moreover, fatal accidents produce negative returns at connected companies and are associated with the subsequent departure of well-connected executives. These results provide suggestive evidence that connections enable firms to avoid (potentially costly) compliance measures, rather than using connections to avoid regulatory response after accidents occur. Our findings emphasize the social costs of political connections, and suggest that appropriate regulatory incentives may be useful in mitigating these costs.

download in pdf format
   (494 K)

email paper

A non-technical summary of this paper is available in the August 2015 NBER digest.  You can sign up to receive the NBER Digest by email.

Supplementary materials for this paper:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21266

Published: Raymond Fisman & Yongxiang Wang, 2015. "The Mortality Cost of Political Connections," The Review of Economic Studies, vol 82(4), pages 1346-1382.

Users who downloaded this paper also downloaded* these:
Fisman and Wang w20090 Corruption in Chinese Privatizations
Ljungqvist, Chen, Jiang, Lu, and Zhou w20930 State Capitalism vs. Private Enterprise
Spolaore w21250 The Political Economy of European Integration
Chaney, Sraer, and Thesmar w16060 The Collateral Channel: How Real Estate Shocks Affect Corporate Investment
Atkin, Chaudhry, Chaudry, Khandelwal, and Verhoogen w21417 Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us