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Publicado en: Documento de trabajo

The Value of Political Capital: Dictatorship Collaborators as Business Elites

Felipe González; Mounu Prem

Documento de Trabajo IE-PUC, N° 507, 2018

Abstact: 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 a work premium for those who had previously collaborated with Pinochet. After democratization, however, collaborators were removed from boards and their compensation premium disappeared, suggesting that the value of their networks depreciated. To shed light on these findings, we study military  personnel before, during, and after Pinochet and find evidence of a wage premium only during the dictatorship. We interpret these results as Pinochet favoring his collaborators while he was in power.

Keywords: political capital, collaborators, dictatorship, armed forces


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