Politics at Work

We study the role of politics in the labor market using new data on the political affiliation of the near-universe of private sector workers and business owners in Brazil over the 2002-2017 period. We establish three main facts. First, there is substantial political segregation in the workplace: workers of the same political party work together. Second, business owners of a given party are more likely to employ workers belonging to the same party. These results are mainly driven by owners’ preferences for workers of their own party, rather than workers’ preferences for co-partisan co-workers. Third, we uncover a large political wage premium: within a firm, workers of the same political party of the business owner are paid more. All these empirical facts are larger in magnitudes than analogous ones we establish along gender and racial lines. Our findings highlight the importance of individual political views in shaping firm behavior and labor market outcomes.