David Thesmar, Massachusetts Institute of Technology
Elio Nimier-David, University of Chicago
Abstract: Since 1967, all French firms with more than 100 employees are required to share a fraction of their excess-profits with their employees. Through this scheme, firms with excess-profits distribute on average 10.5% of their pre-tax income to workers. In 1990, the eligibility threshold was reduced to 50 employees. We exploit this regulatory change to identify the effects of mandated profit-sharing on firms and their employees. The cost of mandated profit-sharing for firms is evident in the significant bunching at the 100 employee threshold observed prior to the reform, which completely disappears post-reform. Using a difference-in-difference strategy, we find that, at the firm-level, mandated profit-sharing (a) increases labor share by 1.8 percentage points, (b) reduces the profit share by 1.4 percentage points, and (c) does not affect investment nor productivity. At the employee level, mandated profit-sharing increases low-skill workers' total compensation and leaves high-skill workers total compensation unchanged. Overall, mandated profit-sharing redistributes excess-profits to lower-skill workers in the firm, without generating significant distortions or productivity effects.
Discussant: Carlos Avenancio-Leon, Indiana University
Abstract: This paper documents that foreign lobbying influences US government spending. We introduce a comprehensive dataset of over 230,000 date-stamped, in-person meetings between lobbyists representing foreign governments (foreign agents) and individual US legislators, state governors, and employees of US executive agencies from 2000 to 2018. The data suggest that foreign agents meet disproportionately with individuals important for foreign aid and corporate subsidies, like legislators sitting on relevant congressional committees. Foreign agents also maintain connections with legislators even after they depart these committees reflecting the long-term nature of these arrangements. Around meetings, foreign countries receive greater amounts of financial aid. Foreign firms whose governments lobby more often also receive larger corporate subsidies from areas the legislators and governors that they meet with represent. However, relative to unconnected foreign firms, these subsidies create fewer jobs five years after receipt, suggesting that a quid pro quo mechanism might be at play. Moreover, we study benefits and costs accruing to legislators and find monetary and electoral benefits, and find no evidence that US legislators are punished by their constituents for meeting with foreign agents.
Alminas Zaldokas, National University of Singapore
Abstract: Using detailed public procurement data from 15 million item purchases in Brazil spanning 2005-2021, our analysis uncovers a prevalent bid-rigging pattern: the lowest bidder, referred to as 'kamikaze,' typically withdraws after the auction concludes, paving the way for the second-lowest bid to emerge as the winner. This pattern is observed in 15-20% of procurement auctions and results in 15-1% higher procurement prices. Kamikaze and winning firms are more likely to share owners, suggesting collusion. This bid-rigging behavior correlates with negative outcomes, such as increased mortality rates in public hospitals and more road accidents following road service contracts.
Discussant: David Schoenherr, Princeton University
