The Value of Political Capital: Dictatorship Collaborators as Business Elites

What is the value of political capital for individuals? Towards the end of the Pinochet dictatorship in Chile, military and civilian collaborators entered the business elite, controlling the largest and most important firms in the country. Using a novel panel dataset of board members in these firms, we document an appointment premium for those who had previously collaborated with Pinochet. After democratization, however, collaborators were removed from boards and their compensation premium disappeared. These results suggest that dictatorship collaborators earn a premium in the business world in dictatorship, but not in democracy.

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