Occupy Government: Democracy and the Dynamics of Personnel Decisions and Public Finances

This work investigates causes and consequences of patronage in Brazilian cities since the country’s re-democratization. It uses five election cycles and compares the hiring of winning and losing party members in close elections to causally estimate patronage. Cities increase their shares of civil servants affiliated with winning political coalitions by 3 percentage points during a mayoral term, and also increase their wage shares by 4 percentage points. Overall, patronage explains slightly more than 50% of the large increase in politically affiliated public employees since re-democratization. Moreover, we find that federal transfers and lack of accountability are important determinants of patronage.