The Journal of Politics: Why Don't You Get A Job? Evidence From Campaign Spending Limits

The Journal of Politics
Why Don't You Get a Job? Evidence from Campaign Spending Limits
--Manuscript Draft--
Manuscript Number: 220818
Full Title: Why Don't You Get a Job? Evidence from Campaign Spending Limits
Article Type: Research Article
Section/Category: Political Theory
Corresponding Author: Caique Melo

Bocconi University: Universita Bocconi
ITALY
Corresponding Author Secondary

Information:
Corresponding Author's Institution: Bocconi University: Universita Bocconi
Corresponding Author's Secondary

Institution:
First Author: Caique Melo
First Author Secondary Information:
Order of Authors: Caique Melo
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Abstract: Regulations concerning the funding of election campaigns play a critical role in
safeguarding the integrity of political processes and institutions in any democracy.
However, despite its diffusion, we know little about how politicians respond to financial
constraints and whether this response has long-term political consequences. I analyze
how spending limits affect the selection of workers in the public sector as a reward for
political support. To establish causality, I rely on an institutional rule limiting the
spending allowed for mayoral candidates. Combining electoral data and Brazilian
administrative labor market registries, I estimate a positive effect of 12 percent in the
likelihood of public sector employment for members of the winning candidate's
coalition. I then show that employment is concentrated in technical-ranked jobs and
distributed to non-ideologically connected donors. The increased allotment of public
jobs also results in substantial deterioration in policy outcomes, namely health and
education indicators.
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On-line Appendix
Online Appendix to "Why Don’t You Get a Job? Evidence
from Campaign Spending Limits"
For online publication only

October 3, 2022
A Appendix to Section 2 – Institutional Background 2
B Appendix to Section 3 – Empirical Analysis 9
C Appendix to Section 4 – Results 22
D Appendix to Section 6 – Health Care Provision and Education Performance 36
1
A Appendix to Section 2 – Institutional Background
Figure A.1: Example of the use of public sector employment as an

exchange for political support
Translation: Public Ministry (MP) requests a conviction for political use of public office in the
municipality of Campinas.
Notes: The Public Ministry (MP) initiated a lawsuit against the mayor of Campinas (State of
São Paulo), Jonas Donizette. In the civil action, the MP accused the mayor of creating 846 positions of
free appointment (commissioned and trusted positions), a number incompatible with the size of the
bureaucratic structure of the municipality. In particular, according to the MP, the officials themselves
admitted that they were hired in exchange for political support during the electoral campaign period
or for belonging to the nomination quota of the political parties supporting the mayor. Accessed on
June 16, 2022.
2
Translation: Audifax is denounced for corruption schemes and allotment of appointments.
Notes: Audifax Barcelos, mayor of the city of Serra, state of Espírito Santo, was denounced by
the Public Ministry (MP) for misappropriation of function and allotment of public offices as political
bargaining. According to the lawsuit filed by the MP, the irregularity in the allocation of the positions
began after the approval of a municipal law that created more than 300 commissioned appointments.
However, the mayor did not offer a plausible explanation for the purpose of the created positions.
In addition, there was a deviation in the function of the positions. Specifically, public servants
performed purely administrative activities in disagreement with the remuneration attributed to each
position. Accessed on June 16, 2022.
3
Translation: Bruno Covas is investigated for alleged fraud in hiring commissioned appointments.
Notes: The Public Ministry (MP) of the state of São Paulo has initiated a lawsuit against the
mayor of the city of São Paulo, Bruno Covas. The judicial process was filed after an investigation
identified evidence of fraud in hiring 239 public servants for commissioned positions. The suspicion
is that the municipal administration would be hiring political supporters linked to the mayor’s office
for commissioned jobs (without public examinations), at high costs, for administrative functions for
which several candidates have been approved in competition in recent years but were not appointed.
Accessed on June 16, 2022.
4
Translation: Former secretary reveals ’job hanger’ at the Health Department of the municipality of
Cuiabá to meet political interests.
Notes: In testimony to the Public Ministry (MP), the former Secretary of Health of the mu-
nicipality of Cuiabá, Huark Douglas Correia, revealed that the Municipal Health Department
unnecessarily increased the number of civil servants hired for commissioned positions. The
investigation initiated by the MP points out that the mayor ordered the irregular hiring of 259 civil
servants between March and December 2018. The hiring volume was also incompatible with the
needs of the Municipal Health Department. As a result of the irregularities reported, Mayor Emanuel
Pinheiro (MDB) was removed from the municipal administration. Accessed on June 16, 2022.
5
Figure A.5: Overview of spending caps and campaign spending
reporting for different countries
(A) Are there limits on the amount (B) Are there limits on the amount
a political party can spend? a candidate can spend?
Yes 65 Yes 88
No 106 No 81
No data 9 No data 9
0 20 40 60 80 100 120 140 0 20 40 60 80 100 120 140
Frequency Frequency
(C) Do political parties have to report (D) Do candidates have to report regularly
regularly on their finances? on their finances?
Yes 137 Yes 123
No 35 No 48
No data 8 No data 7
0 20 40 60 80 100 120 140 0 20 40 60 80 100 120 140
Frequency Frequency
Notes: This figure provides an overview of the existence of campaign spending limits and the
necessity to declare campaign spending for different countries. Data on this information is made
available by the Institute for Democracy and Electoral Assistance (IDEA).
6
Figure A.6: Spatial distribution of municipalities in the treated
and control groups
Notes: This figure displays the spatial distribution of the municipalities belonging to the treated and
control groups. From the data referring to the highest amount spent by a mayor candidate in the
2012 elections, I define a binary variable identifying the units above or below the limit of R$142,857
determined by the financial reform.
7
Figure A.7: Spatial distribution of municipalities exposed to the
campaign spending limit
Notes: This figure displays the spatial distribution of the municipalities belonging to the treated
group. From the data referring to the campaign spending, I define a continuous variable indicating
the maximum amount spent by a candidate for mayor in the 2012 elections.
8
B Appendix to Section 3 – Empirical Analysis
Data
This section provides a detailed overview of the datasets I use in the paper. The Brazilian
Superior Electoral Court (TSE) makes the first dataset available, which comprises the pool
of donors to mayors’ campaigns and electoral results. Second, labor market registries are
collected from the Relação Anual de Informações Sociais (RAIS) for the period 2010-2019. Third,
I gather data on health and education indicators from Datasus and (Instituto Nacional de
Estudos e Pesquisas Educacionais Anísio Teixeira, INEP), respectively. Lastly, I assemble data on
municipal characteristics through the 2010 Population Census. Next, I describe each dataset
in detail, the matching procedure of campaign contributors and labor market registries, and
the construction of the main outcomes. In Appendix B, I describe the construction and the
source of each variable.
Electoral Data. Data from municipal elections for 2012 and 2016 are publicly provided by
the Superior Electoral Court (TSE). This database contains candidates’ characteristics, such as
the position to be disputed (mayor or city councilor), election results, educational attainment,
gender, age, political party, the coalition in which the candidate belongs, and the amount
spent during the campaign officially declared, among others. TSE also provides detailed
information about donors and their donations to candidates in the 2016 elections, particularly
the unique tax identification (CPF) used to identify individuals among different databases.
Based on the reported 2012 campaign spending information, I observe the maximum amount
spent in each municipality, determining whether the municipality is exposed (or not) to the
campaign spending limit in the 2016 elections. The final sample contains information on
79,567 campaign contributors.
Labor Market Data. To estimate the likelihood of being employed in the public sector after
the 2016 elections, I use the Relação Anual de Informações Sociais (RAIS). RAIS, a matched
employer-employee dataset, includes information on the total number of formal workers
(approximately 65 million per year) registered in the public and private sectors (Ulyssea,
2018). Particularly, RAIS contains information on hours worked, type of contract, age,
gender, educational level, firm size, and economic sector, among others. The submission
9
of data from each worker is mandatory for all firms, under severe penalties applied by
the Ministério do Trabalho e Emprego (MTE) otherwise. Each worker registered in a formal
employment contract is identified by their CPF, which allows me to map individuals over
the years between different datasets and employers. To assess employment dynamics in the
public sector, I use the RAIS dataset for 2010-2019, which allows me to investigate anticipatory
behavior.
Public Services. I build a database containing information on various outcomes that mea-
sure the quality of local public health provision for 2020. Data are made available by the
Ministry of Health through the Datasus system. Specifically, I collect data on the number of
children born weighing less than 1500g and 2500g, the total number of births registered in
each municipality, and the number of fetal deaths and deaths of children under one year of
age.1 Data on education comes from the National Institute for Research on Education (INEP).
I build a dataset at the municipal level containing information on approval rate, failure rate,
and dropout rate. As I am interested in testing the performance at the local level, I keep only
data from municipal schools in the sample.
Municipal Characteristics. Data on municipal characteristics come from the Brazilian In-
stitute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística, IBGE)). The
2010 Population Census provides several socioeconomic and demographic characteristics at
the municipal level. Some of these key variables include income per capita, income inequal-
ity, population density, the share of the population living in urban areas, and the illiterate
population.
1Those indicators were chosen based on their relevance in terms of welfare and relatively rapid response to
public policy (Brollo and Troiano, 2016; Brollo, Kaufmann and La Ferrara, 2020; Carrillo and Feres, 2019).
10
Defining the Outcomes of Interest
I use the CPF (unique tax identifier) to merge information from campaign donors and labor
market records. These two databases allow me to map the members of each coalition over
the years, evaluating the dynamics of employment in the public sector for municipalities
above and below the threshold determined by the campaign financial reform implemented
in 2015. I construct a panel at the worker/year level with details about employment status
in the public sector and characteristics of the position occupied. In particular, the main
employment measure is an indicator variable that assumes value 1 when any member of
the winning mayor’s coalition is employed in the municipal administration at any point in a
given year for the period 2010:2019.2 I am able to match 58.4% of donors in the RAIS dataset.
Of this set of perfectly mapped political supporters, 76% are identified as employees in the
public sector for the period 2016:19.
Next, I investigate the characteristics of each position occupied by following the Classifi-
cação Brasileira de Ocupações 2002 (CBO2002, hereafter), an exercise very close to Colonnelli,
Prem and Teso (2020). In this way, I can unify different positions that are similar in terms of
skills required for its execution. To make this classification homogeneous for the job market
of other countries, I recode each position using ISCO-88, which aggregates the positions
into large groups according to the position-specific technical requirement level 3. To ensure
statistical power, I aggregate the ISCO-88 classification into four hierarchical categories: pro-
fessional and managerial, technical and supervisory, and skill-intensive blue-collar (Tigre
and Melo, Forthcoming). Put differently, I construct three outcomes consisting of indicator
variables that assume value 1 when the worker occupies any position among these three
aforementioned categories.
2I keep the highest paid position for the subsample of donors who have more than one employment contract
within the same year-sector.
3I regard the ISCO-88 as a particularly suitable occupational classification system to be mapped from CBO-
2002 mainly because it permits a direct inference of the skills required to perform an occupation – ranging
from elementary tasks, at the lowest skill-intensive level, to technical and professional tasks, at the highest
skill-intensive level (Menezes-Filho, Muendler and Ramey, 2008).
11
Variable Definitions
This section provides a more detailed description of all the variables I use in the paper. In
Panel A, I detail the variables related to candidates’ characteristics collected from the Supe-
rior Electoral Court (TSE). Panel B describes the variables collected from the administrative
labor market dataset (RAIS). Panel C presents the public service indicators, namely health
and education outcomes, collected from Datasus and INEP. In Panel D, I characterize mu-
nicipal characteristics made available by IBGE.
(A) Candidates’ Characteristics
• Age: Continuous variable indicating the age in years declared by the elected mayor in
a given municipality. Source: Tribunal Superior Eleitoral (TSE).
• Female: Indicator variable that assumes value 1 if the elected mayor in a given mu-
nicipality declared him/herself as being a female. Source: Tribunal Superior Eleitoral
(TSE).
• White: Indicator variable that assumes value 1 if the elected mayor in a given municipality-
term declared herself as being a white person. Source: Tribunal Superior Eleitoral (TSE).
• Term Limit: Indicator variable that assumes value 1 if the elected mayor in a given
municipality is in her/his second consecutive mandate as a mayor, thus facing term
limit as mayor. Source: Tribunal Superior Eleitoral (TSE).
• Reelection: Indicator variable that assumes value 1 if the elected mayor in 2016 in a given
municipality got reelected as mayor in that same municipality in the 2020 elections.
Source: Tribunal Superior Eleitoral (TSE).
• PMDB: Indicator variable that assumes value 1 if the elected mayor in a given munic-
ipality is affiliated to the Partido do Movimento Democrático Brasileiro. Source: Tribunal
Superior Eleitoral (TSE).
• PSDB: Indicator variable that assumes value 1 if the elected mayor in a given munici-
pality is affiliated to the Partido da Social Democracia Brasileira. Source: Tribunal Superior
Eleitoral (TSE).
12
• PT: Indicator variable that assumes value 1 if the elected mayor in a given municipality
is affiliated to the Partido dos Trabalhadores. Source: Tribunal Superior Eleitoral (TSE).
(B) Labor Market Outcomes
• Public Sector Employment: Indicator variable that assumes value 1 if the campaign donor
belonging to the elected mayor’s coalition is registered in a public sector position in a
given year. Source: Relação Anual de Informações Sociais (RAIS).
• Monthly Earnings: Continuous variable indicating the monthly earnings observed for
a public sector employment campaign donor in a given year. Source: Relação Anual de
Informações Sociais (RAIS).
• Professional and Managerial: Indicator variable that assumes value 1 if the candidate was
employed in a professional/managerial position before the election. The classification
is made following ISCO-88. Source: Relação Anual de Informações Sociais (RAIS).
• Technical and Supervisory: Indicator variable that assumes value 1 if the candidate was
employed in a technical/supervisory position before the election. The classification is
made following ISCO-88. Source: Relação Anual de Informações Sociais (RAIS).
• Skill-Intensive Blue-Collar: Indicator variable that assumes value 1 if the candidate
was employed in a blue-collar position before the election. The classification is made
following ISCO-88. Source: Relação Anual de Informações Sociais (RAIS).
• Committed Donor: Indicator variable that assumes value 1 if the campaign contributor
is employed in the public sector and donated to the same political party in the 2012
and 2016 municipal elections. Source: Relação Anual de Informações Sociais (RAIS).
• Non-Committed Donor: Indicator variable that assumes value 1 if the campaign contrib-
utor is employed in the public sector and donated to different political parties in the
2012 and 2016 municipal elections. Source: Relação Anual de Informações Sociais (RAIS).
• Bordering Municipalities: Indicator variable that assumes value 1 if the campaign donor
is employed in the public sector in a bordering municipality to which the mayoral
candidate was elected. Source: Relação Anual de Informações Sociais (RAIS).
13
• Appointment-Based Jobs: Indicator variable that assumes value 1 if the campaign donor
is employed in the public sector in a position through a discretionary appointment.
Source: Relação Anual de Informações Sociais (RAIS).
• Formal Examination: Indicator variable that assumes value 1 if the campaign donor is
employed in the public sector in a position through public tender. Source: Relação
Anual de Informações Sociais (RAIS).
(C) Public Services
• Birth Weight < 1500g: Continuous variable indicating the ratio between the number of
children born weighing less than 1500g and the number of births in a given municipality
in 2020. Source: Datasus.
• Birth Weight < 2500g: Continuous variable indicating the ratio between the number of
children born weighing less than 2500g and the number of births in a given municipality
in 2020. Source: Datasus.
• Infant Mortality: Continuous variable indicating the number of fetal deaths and deaths
of children under one year of age in 2020. Source: Datasus.
• Approval Rate: Continuous variable indicating the approval rate of students from mu-
nicipal schools in 2019. Source: Instituto Nacional de Estudos e Pesquisas Educacionais
Anísio Teixeira (INEP).
• Failure Rate: Continuous variable indicating the failure rate of students from municipal
schools in 2019. Source: Instituto Nacional de Estudos e Pesquisas Educacionais Anísio
Teixeira (INEP).
• Dropout Rate: Continuous variable indicating the dropout rate of students from munic-
ipal schools in 2019. Source: Instituto Nacional de Estudos e Pesquisas Educacionais Anísio
Teixeira (INEP).
(D) Municipal Characteristics
• Health Assistance: Continuous variable indicating the share of doctors over the munic-
ipality’s total population. Source: Instituto Brasileiro de Geografia e Estatística (IBGE).
14
• Low Income Rate: Continuous variable indicating the share of low-income inhabitants
over municipality’s total population. Source: Instituto Brasileiro de Geografia e Estatística
(IBGE).
• Rainfall: Continuous variable indicating the volume of rainfall registered in a given
municipality. Source: Instituto Brasileiro de Geografia e Estatística (IBGE).
• Temperature: Continuous variable indicating the temperature registered in a given
• Gini Coefficient: Continuous variable indicating the Gini coefficient in a given munici-
pality. Source: Instituto Brasileiro de Geografia e Estatística (IBGE).
• Share of Indigenous Population: Continuous variable indicating the share of indigenous
population over the municipality’s total population in a given municipality. Source:
Instituto Brasileiro de Geografia e Estatística (IBGE).
• Income per Capita: Continuous variable indicating the income per capita in Brazilian
reais (R$) in a given municipality. Source: Instituto Brasileiro de Geografia e Estatística
(IBGE).
• Illiteracy Rate: Continuous variable indicating the illiteracy rate in a given municipality.
Source: Instituto Brasileiro de Geografia e Estatística (IBGE).
• Unemployment Rate: Continuous variable indicating the unemployment rate in a given
• Distance to the State Capital: Continuous variable indicating the distance between the
municipality the capital of its state, measured from geographic centers. Source: Insti-
tuto Brasileiro de Geografia e Estatística (IBGE).
• Population: Continuous variable indicating the population in a given municipality.
Source: Instituto Brasileiro de Geografia e Estatística (IBGE).
• Municipal Area: Continuous variable indicating the area of a given municipality. Source:
• Altitude: Continuous variable indicating the altitude of a given municipality. Source:
15
• Semiarid: Indicator variable that assumes value 1 if the municipality belongs to the
semiarid region. Source: Instituto Brasileiro de Geografia e Estatística (IBGE).
• AM Signal: Indicator variable that assumes value 1 if the municipality has at least one
AM radio broadcaster. Source: Perfil dos Municípios Brasileiros (PME).
• FM Signal: Indicator variable that assumes value 1 if the municipality has at least one
FM radio broadcaster. Source: Perfil dos Municípios Brasileiros (PME).
• Internet Provider: Indicator variable that assumes value 1 if the municipality has at least
one internet provider. Source: Perfil dos Municípios Brasileiros (PME).
• Library: Indicator variable that assumes value 1 if the municipality has at least one
library. Source: Perfil dos Municípios Brasileiros (PME).
• University: Indicator variable that assumes value 1 if the municipality hosts at least one
higher education institution. Source: Perfil dos Municípios Brasileiros (PME).
16
Tables
Table B.1: Summary statistics for the overall sample and disaggregated by treatment status
Overall Treated Control Std. Diff.

Variables
Mean Std. Dev. Mean Std. Err. Mean Std. Err. Diff. P-Value
(A) Candidates’ Characteristics (1) (2) (3) (4) (5) (6) (7) (8)
Age 49.34 12.890 49.90 0.373 49.84 0.815 -0.065 0.942

Female 0.13 0.336 0.10 0.011 0.10 0.023 -0.002 0.935
White 0.66 0.472 0.78 0.015 0.83 0.029 0.050 0.147
Term Limit 0.41 0.492 0.45 0.018 0.42 0.038 -0.027 0.524
PMDB 0.14 0.347 0.19 0.014 0.23 0.033 0.036 0.287
PSDB 0.11 0.307 0.11 0.011 0.13 0.026 0.019 0.488
PT 0.06 0.238 0.05 0.008 0.07 0.020 0.017 0.382
(B) Labor Market Outcomes (1) (2) (3) (4) (5) (6) (7) (8)
Public Sector Employment 0.24 0.426 0.22 0.001 0.20 0.002 -0.021 0.000
Monthly Earnings 3465.79 4518.037 2883.12 19.129 2822.40 30.318 -60.719 0.107
Professional and Managerial 0.33 0.471 0.32 0.003 0.33 0.005 0.015 0.006
Technical and Supervisory 0.26 0.439 0.24 0.003 0.24 0.004 0.003 0.531
Skill-Intensive Blue-Collar 0.21 0.408 0.25 0.003 0.25 0.005 -0.004 0.490
(C) Municipality Characteristics (1) (2) (3) (4) (5) (6) (7) (8)
Health Assistance 20.00 24.146 26.58 1.161 25.23 1.988 -1.355 0.614
Low Income Rate 22.12 16.810 17.72 0.535 15.95 1.153 -1.774 0.166
Rainfall 4.72 0.338 4.71 0.011 4.73 0.024 0.013 0.609
Temperature 22.57 2.959 21.49 0.107 20.80 0.220 -0.693 0.007
Gini Coefficient 0.51 0.066 0.48 0.002 0.48 0.005 -0.001 0.889
Share of Indigenous Pop. 0.80 4.760 0.42 0.076 0.19 0.086 -0.225 0.185
Income per Capita 502.07 253.652 515.33 7.809 527.26 15.114 11.930 0.516
Illiteracy Rate 15.00 9.622 14.58 0.334 13.29 0.644 -1.290 0.100
Unemployment Rate 6.74 3.641 5.04 0.113 5.11 0.268 0.068 0.804
Distance to the State Capital 237.33 168.383 282.25 5.547 295.89 10.052 13.631 0.291
Population 62814.54 362780.200 7854.51 200.044 6741.49 319.756 -1113.022 0.016
Municipal Area 1824.86 6796.290 517.21 35.694 408.99 38.049 -108.214 0.174
Altitude 3.99 3.050 5.20 0.098 5.21 0.206 0.014 0.951
Semiarid 0.18 0.385 0.17 0.013 0.16 0.028 -0.013 0.685
AM Signal 0.27 0.445 0.09 0.010 0.07 0.019 -0.028 0.250
FM Signal 0.41 0.492 0.24 0.015 0.13 0.026 -0.112 0.002
Internet Provider 0.59 0.491 0.37 0.017 0.43 0.038 0.059 0.158
Library 0.94 0.245 0.93 0.009 0.95 0.018 0.018 0.396
University 0.45 0.497 0.23 0.015 0.20 0.031 -0.027 0.448
Notes: This table shows descriptive statistics for the overall sample and disaggregated between treated and control munici-
palities. Panel A includes the candidates’ characteristics obtained from TSE. Panel B describes the outcomes of interest present
in the analysis, collected from RAIS for the period 2010-2019. Panel C shows the municipal characteristics collected from the
2010 Population Census. See Appendix B for a detailed description of the variables included in this table.
17
Assessing the Empirical Design
The internal validity of regression discontinuities analysis is based on the assumptions of
smoothness of the running variable and continuity of covariates around the discontinuity.
Nonetheless, given the exclusive nature of the counterfactual analysis, this assumption is not
directly testable. To verify whether the treatment assignment is "as good as random," the
usual procedure involves conducting the two following empirical exercises.
Density Tests. To rule out potential concerns related to endogenous electoral selection into
the treatment, the standard practice in the literature is to show the absence of a density
discontinuity around the zero threshold. For instance, this imbalance could be caused by
voters’ revealed preferences for candidates with a higher ability to attract political supporters
being correlated with public employment. Hence, the number of treated observations above
the cutoff should be similar to the number of control observations below the discontinuity.
Figure B.1 presents the graphical results of the McCrary discontinuity test, along with the
estimates of the log difference in the height of the empirical density distributions around
the threshold. The estimated discontinuity at the zero threshold is -0.237 (log difference
in height) with a standard error of 0.342, indicating no evidence of manipulation of the
running variable at the cutoff (McCrary, 2008). Additionally, Figure B.2 shows the empirical
distribution of the running variable.
Balance of Covariates. To reinforce the evidence suggested by the previous test and rule
out that endogenous institutional characteristics are the actual drivers of the results, the sec-
ond standard practice in the RDD literature is to show that relevant baseline characteristics
are not discontinuous around the cutoff. Although this does not imply that the potential
outcome would be continuous around the cutoff in the absence of treatment, discontinuity
in pre-treatment covariates may indicate that institutional arrangements could drive public
sector employment. Specifically, candidates’ municipalities with high levels of campaign
spending may be better off in other dimensions such as political alignment with higher
offices, incumbency, or support from client voters that benefit from his party holding office.
Accordingly, in Figure B.3, I provide the estimated discontinuities over baseline character-
istics at the candidate and municipal levels, in which almost every baseline characteristic is
balanced across the zero discontinuity.
18
Figure B.1: McCrary test for the manipulation of the running variable
.00002
.000015
.00001
5.00e-06
0
0 100000 200000 300000
Maximum Spending in 2012

McCrary discontinuity estimate = -0.237 (0.342)
Notes: This figure depicts the manipulation test of the running variable (McCrary, 2008). The running
variable is defined as the difference in logs between the discontinuity of R$142,857 and the maximum
amount spent by any mayoral candidate in the 2012 elections. Data on the maximum amount spent
by candidates running for mayor in each municipality in the 2012 elections are made available by
the Superior Electoral Court (TSE). The vertical gray dashed line represents the discontinuity of
R$142,857, determined by the electoral financial reform in 2015. The estimated discontinuity is -0.237
(log difference in height) with a standard error of 0.342. Therefore, the test fails to reject the null
hypothesis that the running variable is continuous around the threshold of R$142,857.
19
Figure B.2: Histogram of the running variable
80
60
Frequency
40
20
0
0 100000 200000 300000
Notes: This figure depicts the distribution of the running variable, defined as the difference in logs
between the discontinuity of R$142,857 and the maximum amount spent by any mayoral candidate
in the 2012 elections. Data on the maximum amount spent by candidates running for mayor in
each municipality in the 2012 elections are made available by the Superior Electoral Court (TSE).
The vertical gray dashed line represents the discontinuity of R$142,857, determined by the electoral
financial reform in 2015.
20
Figure B.3: Estimated discontinuity in baseline characteristics
Age
Female
White
First Term
PMDB
PSDB
PT
Coallition Size
# Voters
Turnout
Health Assistance
Low Income Rate
Rainfall
Temperature
GDP
Share of Indigenous
Income per Capita
Rural Population
Income Tax
Illiterace Rate
Unemployment Rate
Population
Municipal Area
Altitude
Distance to State Capital
Legal Amazon
Gini Coefficient
Semiarid
AM Signal
FM Signal
TV Broadcaster
Internet Provider
Library
University
-1 -.5 0 .5 1
RD Coefficients
Notes: This figure plots the estimated discontinuity in baseline characteristics around the cutoff at
R$142,857. For non-binary measures, dependent variables are transformed into standard deviation
units, following De la Cuesta and Imai (2016). Lines departing from the circles represent 95 percent
level robust confidence intervals. See Appendix B for a detailed description of the variables included
in this figure.
21
C Appendix to Section 4 – Results
Figure C.1: Graphical representation of the effects of campaign spending limits on

employment in the public sector – Non-parametric specification
.36
.32
Public Sector Employment
.28
.24
.2
.16
-3 -2 -1 0 1 2 3
Log of Maximum Spending in 2012
Notes: This figure illustrates the estimated results from Equation 1, considering the campaign donors’
likelihood of employment in the public sector in the 2016 municipal elections as an outcome of interest.
The running variable is defined as the difference in logs between the discontinuity of R$142,857 and
the maximum amount spent by any mayoral candidate in the 2012 elections. Data on campaign
donors is made available by the Superior Electoral Court (TSE), which contains information on the
donor’s name, CPF (unique tax identifier), amount donated, and the recipient mayoral candidate.
Information on employment in the public sector is collected from the Relação Anual de Informações
Sociais (RAIS) for the period 2016-2019, in which it is possible to perfectly link individuals through
the CPF. The vertical and horizontal axes represent the public sector employment probability and
the maximum amount spent in the 2012 municipal elections, respectively. The solid line represents a
local polynomial fitted separately on each side of the threshold.
22
Figure C.2: Graphical representation of the placebo effects of campaign spending limits
on public sector employment
.36
.32
.28
.24
.2
.16
-3 -2 -1 0 1 2 3
likelihood of employment in the public sector for 2010-2015 as an outcome of interest. The running
amount spent by any mayoral candidate in the 2012 elections. Data on campaign donors is made
available by the Superior Electoral Court (TSE), which contains information on the donor’s name,
CPF (unique tax identifier), amount donated, and the recipient mayoral candidate. Information on
employment in the public sector is collected from the Relação Anual de Informações Sociais (RAIS) for
the period 2010-2015, in which it is possible to perfectly link individuals through the CPF. The vertical
and horizontal axes represent the public sector employment probability and the maximum amount
spent in the 2012 municipal elections, respectively. The solid line represents a linear polynomial fitted
separately on each side of the threshold.
23
Table C.1: Effects of campaign spending limits on labor market
outcomes – DiD estimates
Public Sector Professional and Technical and Skill-Intensive

Dependent
Employment Managerial Supervisory Blue-Collar
Variable
(1) (2) (3) (4)
0.020 -0.001 0.020 -0.003

Estimate
(0.005) (0.011) (0.009) (0.009)
P-Value 0.000*** 0.940 0.032** 0.759
Baseline Mean 0.26 0.32 0.27 0.21
Effect over Baseline 7.7% -0.3% 7.4% -1.4%
Observations 675,060 190,976 190,976 190,976
Notes: This table reports the estimated coefficients of the effect of campaign spending limits
on labor market outcomes of campaign contributors. Data on donations are made available by
the Tribunal Superior Eleitoral (TSE), while labor market records are collected from the Relação
Anual de Informações Sociais (RAIS) dataset. I estimate the specification described in Equation
3, restricting the sample to the same bandwidth used in the baseline specification described
in Equation 1. The baseline mean is calculated for the control group for the period 2010-2015.
***, ** and * represent 𝑝 < 0.01, 𝑝 < 0.05 and 𝑝 < 0.1, respectively.
24
OLS Regressions
As described in Section 3, the empirical strategy relies on a Regression Discontinuity Design
(RDD), in which, by definition, the treatment effect is calculated by restricting the sample
to a support of the distribution very close to the discontinuity. As a consequence, there
may be a concern regarding the lack of external validity. To assess this potential concern,
I perform an OLS estimation where I use a fixed-effects approach on the entire sample of
observations between 2010 and 2019. I proceed with the estimation as follows. First, I define
a dummy variable that assumes a value equal to 1 when the municipality is exposed to the
electoral reform and 0 otherwise. Next, I test the effect of the implementation of campaign
spending limits on the likelihood of public sector employment by estimating the following
specification:
𝑌𝑖,𝑚,𝑡 = 𝛼 + 𝛽 𝑂𝐿𝑆 Treat𝑚,𝑡 + 𝜙 𝑝 + 𝜇𝑡 + 𝜀𝑖,𝑚,𝑡 (C.4)
where 𝑌𝑖,𝑚,𝑡 is the outcome of interest for individual 𝑖, municipality 𝑚 in year 𝑡, Treat𝑚,𝑡
is an indicator variable equal to 1 if the highest amount spent by a mayoral candidate in
municipality 𝑚 in the 2012 elections is superior to R$142,857. The parameters 𝜙 𝑝 and 𝜇𝑡 are
party and year fixed effects, respectively. 𝜀𝑖𝑡 is a time-varying error term. Standard errors are
clustered at the municipality level. The parameter of interest 𝛽 𝑂𝐿𝑆 indicates the difference
in public sector employment between exposed and non-exposed municipalities.
Table C.2 reports the results estimated by the fixed effects model when I consider the
full sample of municipalities. In general, the coefficients I find through Equation C.4 are
very close to those I find using the RDD specification described in Equation 1. Focusing on
Column 1, which contains the main outcomes of interest, we see a significant coefficient (at
the 1% level), translating into an effect over the baseline of approximately 15%. However, it is
important to recognize the limitations of the results I find from the OLS estimation. Specifi-
cally, the coefficients estimated by Equation C.4 may be biased if unobservable characteristics
of individuals, politicians, and municipalities are correlated with public sector employment.
Omitted Variable Bias. The estimate obtained through Equation C.4 via OLS may be
influenced by potential unobserved factors that affect public sector employment and that are
also correlated with the implementation of the campaign spending limits. Neglecting these
factors in estimating Equation C.4 is likely to result in a biased coefficient estimate of the
25
impact of spending caps. To address these potentially confounding effects, in the absence
of gold standard randomized control trials or the availability of an instrument variable, I
rely on the omitted variable test proposed by Oster (2019). This test allows me to investigate
and draw conclusions about the sensitivity of OLS estimates to potential biases of omitted
variables. In Table C.3, I report the result of the test. Following the recommendations
proposed by Oster (2019), I present the estimates for the controlled model (the same ones
in Table C.2) and the 𝛿 value that indicates the degree of bias that the OLS estimate should
have for the coefficient found is statistically equal to zero. I perform this test for three
˜ 2.2𝑅,
different constraints (1.7𝑅, ˜ and 3.0𝑅),
˜ and I find that estimates are not affected by
omitted variables. In other words, the absolute value of the 𝛿 value is much greater than 1,
eliminating this potential concern.
Multiple Hypothesis Testing. In Table C.4, I report the p-values for the effect of implement-
ing campaign spending limits on public sector employment following the methodology
proposed by Westfall, Young and Wright (1993). The rationale of the test is to ensure that
in the presence of multiple outcomes, the goal is to determine for which of these outcomes
the treatment has a statistically significant effect (see List, Shaikh and Xu (2019) for a more
detailed discussion). I perform the test considering the main outcome (likelihood of pub-
lic sector employment) and the additional outcomes I evaluate as a potential mechanism
(employment conditional to the skill requirement of each position) in which I reported the
p-value for two different methods (Bonferroni-Holm, and Sidak-Holm). In line with the main
estimates (Equation 1), the effect of implementing financial restrictions is significant for all
the outcomes, confirming that the estimated coefficients presented in Table 1 are not found
purely by chance.
26
Table C.2: OLS estimates of the effect of implementing campaign spending limits
Public Sector Monthly Professional and Technical and Skill-Intensive

Dependent
Employment Earnings Managerial Supervisory Blue-Collar
Variable
(1) (2) (3) (4) (5)
0.053 588.72 -0.001 0.026 -0.039

Estimate
(0.013) (179.745) (0.016) (0.013) (0.016)
P-Value 0.000*** 0.001*** 0.984 0.045** 0.017**
Baseline Mean 0.20 2,479.70 0.33 0.24 0.24
Effect over Baseline 26.5% 23.7% -0.1% 11.1% -16.3%
𝑅2 0.007 0.010 0.014 0.004 0.010
Observations 238,698 87,859 57,734 57,734 57,734
Notes: This table shows the results for the OLS estimation considering the full sample of municipalities
exposed to spending caps. Data on donations are made available by the Tribunal Superior Eleitoral (TSE),
while labor market records are collected from the Relação Anual de Informações Sociais (RAIS) dataset. I
proceed the estimation following the specification described in Equation C.4, where I define an indicator
variable that assumes a value equal to 1 when the municipality is exposed to the electoral reform and 0
otherwise. Standard errors clustered at the municipal level in parentheses. ***, ** and * represent 𝑝 < 0.01,
𝑝 < 0.05 and 𝑝 < 0.1, respectively.
27
Table C.3: Stability of the OLS estimates

Dependent
Variable
(1) (2) (3) (4) (5)
0.053 588.72 -0.001 0.026 -0.039

Controlled Estimate
(0.013) (179.745) (0.016) (0.013) (0.016)
P-Value 0.000*** 0.001*** 0.984 0.045** 0.017**
Controlled 𝑅 2 0.006 0.010 0.014 0.004 0.010
𝛿 for 1.7𝑅˜ (𝛽 𝑂𝐿𝑆 = 0) 8.895 9.844 -0.036 -7.974 12.001
𝛿 for 2.2𝑅˜ (𝛽 𝑂𝐿𝑆 = 0) 5.527 5.837 -0.020 -4.309 6.969
𝛿 for 3.0𝑅˜ (𝛽 𝑂𝐿𝑆 = 0) 3.442 3.534 -0.012 -2.483 4.171
Notes: This table shows the estimated results for the omitted variable bias test proposed by Oster (2019).
We present the OLS-controlled estimate and the estimated 𝛿 for different levels of omitted variable bias
˜ 2.2𝑅,
(1.7𝑅, ˜ and 3.0𝑅).
˜ Data on donations are made available by the Tribunal Superior Eleitoral (TSE),
while labor market records are collected from the Relação Anual de Informações Sociais (RAIS) dataset. All
specifications include controls at the municipal level. Standard errors clustered at the municipal level in
parentheses. ***, ** and * represent 𝑝 < 0.01, 𝑝 < 0.05 and 𝑝 < 0.1, respectively.
28
Table C.4: Correction for multiple hypotheses testing

Dependent
Variable
(1) (2) (3) (4) (5)
0.043 552.71 -0.003 0.023 -0.029

Estimate
(0.002) (34.417) (0.004) (0.004) (0.004)
OLS p-value 0.000*** 0.000*** 0.447 0.000*** 0.000***
Westfall-Young p-value 0.000*** 0.000*** 0.800 0.000*** 0.000***
Bonferroni-Holm p-value 0.000*** 0.000*** 0.447 0.000*** 0.000***
Sidak-Holm p-value 0.000*** 0.000*** 0.447 0.000*** 0.000***
Notes: This table shows the results of the multiple hypothesis testing. We report the OLS and p-values
estimates considering three different methods (Westfall-Young, Bonferroni-Holm, and Sidak-Holm) for labor
market outcomes (see List, Shaikh and Xu (2019) for a more detailed discussion). Data on donations are made
available by the Tribunal Superior Eleitoral (TSE), while labor market records are collected from the Relação Anual
de Informações Sociais (RAIS) dataset. The p-values are based on an estimate with 10,000 bootstrap resampling.
Standard errors clustered at the municipal level in parentheses. ***, ** and * represent 𝑝 < 0.01, 𝑝 < 0.05 and
𝑝 < 0.1, respectively.
29
Robustness Tests
Bandwidth Choice. A potential concern about our results on employment in the public
sector is that they may be conditional on the bandwidth choice. I re-estimate the baseline
estimation described in Equation 1 in which I consider several different ranges of the running
variable, initially considering a bandwidth of 0.3 up to 0.8. The estimated coefficients
following this specification are presented in Figure C.3, along with the 95% confidence
interval. Consistent with the baseline results, the estimated coefficients for each interval are
quite stable and statistically significant for public sector employment. I also perform the
same exercise for all outcomes I consider throughout the analysis, and all results are robust
to this test. The results are available upon request.
Permutation Tests. To provide complementary evidence that the coefficients I find are not
obtained purely by chance, I perform a non-parametric permutation test. In a nutshell, the
test randomizes the running variable (the difference in logs between the discontinuity of
R$142,857 and the maximum amount spent by any mayoral candidate in the 2012 elections)
for each municipality. These artificial samples allow me to draw from the null distribution I
would expect if there was no causal relationship between the implementation of campaign
spending limits and public sector employment. Figure C.4 displays the distribution of
estimates (horizontal axis) obtained from 500 permutations for the main outcome of interest.
The real estimate (gray vertical line) is located far away from the probability mass of the
placebo coefficients. I also perform the same exercise for all outcomes I consider throughout
the analysis, and all results are robust to this test. The results are available upon request.
Bounds for Manipulation Inference. Although the empirical setting does not suffer from the
problem of manipulation of the running variable, I assess whether the main result remains
robust even when allowing some degree of manipulation of the running variable. I follow
the test proposed by Gerard, Rokkanen and Rothe (2020), which enables me to identify
bounds for the effect of the treatment under manipulation or any other factor that could alter
the smoothness of the running variable around the cutoff. Consistent with the main results,
I observe statistically significant bounds for public sector employment. I also perform the
same exercise for all outcomes I consider throughout the analysis, and all results are robust
to this test. The results are available upon request.
30
Staggered Event Studies. I now address concerns related to the recent literature on difference-
in-differences designs with staggered treatment (see Athey, Imbens and Wager (2018); Imai
and Kim (2019); De Chaisemartin and d’Haultfoeuille (2020); Callaway and Sant’Anna (2021);
Sun and Abraham (2021); Goodman-Bacon (2021)). These papers show that two-way fixed
estimators can be expressed as the weighted average of several difference-in-differences
comparisons between cross-sectional units. Specifically, they first show that some of these
comparisons may be inadequate under dynamic treatment effects, as the control group may
be composed of already treated units. I test this concern by running the diagnosis proposed
by De Chaisemartin and d’Haultfoeuille (2020) and Callaway and Sant’Anna (2021), which
inspects the presence of negative weights. I detect no negative weights when running their
diagnostic. In addition, I run both estimators and I find similar results as shown in Figure
C.5.
31
Figure C.3: Robustness to the bandwidth choice
.06
.04
RDD Coefficients
.02
0
-.02
.3 .4 .5 .6 .7 .8
Bandwidth
Notes: This figure shows the estimated coefficients for different bandwidth choices on the effect
of campaign spending limits on the likelihood of public sector employment. I estimate alternative
specifications from Equation 1, defining different bandwidths ranging from 0.3 up to 0.8. The running
amount spent by any mayoral candidate in the 2012 elections. Data on campaign donors is made
available by the Superior Electoral Court (TSE), which contains information on the donor’s name,
CPF (unique tax identifier), amount donated, and the recipient mayoral candidate. Information on
employment in the public sector is collected from the Relação Anual de Informações Sociais (RAIS) for the
period 2016-2019, in which it is possible to perfectly link individuals through the CPF. The enclosed
area represent the 95% confidence interval for each estimated coefficient.
32
Figure C.4: Permutation test
60
40
Frequency
20
0
-.03 -.02 -.01 0 .01 .02 .03

Placebo Coefficients
Notes: This figure shows the permutation tests for the coefficients related to the likelihood of em-
ployment in the public sector. The histogram depicts the empirical probability density function of
each coefficient estimated from 500 randomized placebo running variables. The running variable is
defined as the difference in logs between the discontinuity of R$142,857 and the maximum amount
spent by any mayoral candidate in the 2012 elections. Data on campaign donors is made available by
the Superior Electoral Court (TSE), which contains information on the donor’s name, CPF (unique tax
identifier), amount donated, and the recipient mayoral candidate. Information on employment in the
public sector is collected from the Relação Anual de Informações Sociais (RAIS) for the period 2016-2019,
in which it is possible to perfectly link individuals through the CPF. The gray dashed vertical line
represents the true estimate, and the dashed vertical red lines represent the 1% and 99% percentile,
respectively.
33
Table C.5: Bounds for manipulation inference
Public Sector
Dependent Variable Employment
(1)
(A) Share always assigned 0.836

0.0287***
ITT: Ignoring manipulation
[0.0148, 0.0426]
(B) Hypothetical share of manipulation

0.1% [0.0145, 0.0423]
0.2% [0.0141, 0.0421]
0.3% [0.0136, 0.0420]
0.4% [0.0131, 0.0419]
0.5% [0.0109, 0.0422]
1.0% [0.0091, 0.0426]
Notes: This table shows the results following the test proposed
by Gerard, Rokkanen and Rothe (2020). Panel A shows the re-
sults when I do not consider any degree of manipulation, while
Panel B shows the results for different levels of manipulation
(0.1%, 0.2%, 0.3%, 0.4%, 0.5%, and 1%). ***, ** and * represent
𝑝 < 0.01, 𝑝 < 0.05 and 𝑝 < 0.1, respectively.
34
Figure C.5: Effect of campaign spending limits on public sector employment,
alternative estimators
.04
.02
Treatment Effect
0
-.02
-.04
-5 -4 -3 -2 -1 0 1 2 3
Years Relative to 2016 Elections
De Chaisemartin-D'Haultfoeuille (2020)
Callaway and Sant'Anna (2021)
Notes: This figure shows the estimated coefficients based on the estimators proposed by De Chaisemartin
and d’Haultfoeuille (2020) and Callaway and Sant’Anna (2021), considering campaign donors’ likelihood of
employment in the public sector in the 2016 elections as an outcome of interest. Data on campaign donors is
made available by the Superior Electoral Court (TSE), which contains information on the donor’s name, CPF
(unique tax identifier), amount donated, and the recipient mayoral candidate. Information on employment in
the public sector is collected from the Relação Anual de Informações Sociais (RAIS) for the period 2010-2019, in
which it is possible to perfectly link individuals through the CPF. The vertical and horizontal axes represent the
probability of public sector employment and calendar years relative to the 2016 municipal elections. The vertical
solid lines represent the 95% confidence interval.
35
D Appendix to Section 6 – Health Care Provision and Education Performance
Table D.1: Summary statistics for the overall sample and disaggregated by treatment status
Overall Treated Control Std. Diff.

Variables
Mean Std. Dev. Mean Std. Err. Mean Std. Err. Diff. P-Value
(A) Health Indicators (1) (2) (3) (4) (5) (6) (7) (8)
Birth Weight < 1500g 4.33 6.365 26.50 0.974 3.62 0.116 -22.883 0.000
Birth Weight < 2500g 25.28 37.803 100.86 2.030 19.53 0.579 -81.331 0.000
Infant Mortality 33.64 27.042 35.31 0.383 22.93 1.004 -12.378 0.000
(B) Education Indicators (1) (2) (3) (4) (5) (6) (7) (8)
Approval Rate 98.52 3.120 98.41 0.047 99.18 0.075 0.768 0.000
Failure Rate 1.73 2.553 1.72 0.056 1.79 0.184 0.069 0.712
Dropout Rate 2.27 9.137 2.35 0.184 1.23 0.154 -1.121 0.098
Notes: This table shows descriptive statistics for the overall sample and disaggregated between treated and control
municipalities. Panel A includes health outcomes obtained from Datasus. Panel B describes the education indicators
collected from INEP. See Appendix B for a detailed description of the variables included in this table.
36
Table D.2: Effects of campaign spending limits on municipal
expenditures in education and health
Share of Expenditures Share of Expenditures

(A) Linear in Education in Health
(1) (2) (3) (4)
-0.014 -0.014 0.012 0.013

Estimate
(0.015) (0.015) (0.013) (0.011)
Robust p-value 0.524 0.288 0.376 0.278
Manual Optimal Manual Optimal
Bandwidth
0.60 0.60 0.60 0.67
Baseline Mean 0.32 0.32 0.16 0.16
Effect over Baseline -4.5% -4.5% 7.3% 8.0%
Observations 5,301 5,301 5,301 5,301
Share of Expenditures Share of Expenditures

(B) Quadratic in Education in Health
(1) (2) (3) (4)
-0.016 -0.019 0.014 0.016

Estimate
(0.025) (0.016) (0.016) (0.012)
Robust p-value 0.610 0.251 0.605 0.253
Bandwidth
0.60 1.13 0.60 1.34
Baseline Mean 0.32 0.32 0.16 0.16
Effect over Baseline -5.0% -6.0% 9.0% 10.0%
Observations 5,301 5,301 5,301 5,301
Notes: This table reports the estimated coefficients of the effect of campaign
spending limits on health and education expenditures. Data on municipal budget
for 2020 is collected from FINBRA (Finanças Municipais). As a dependent variable,
I consider the ratio of health/education expenditures over the municipality’s total
budget. I estimate the specification described in Equation 1, where odd columns
show the results considering a bandwidth of 0.6, while even columns consider
the optimal choice of bandwidth proposed by Calonico, Cattaneo and Titiunik
(2014). Panel A shows the results considering a linear polynomial, and Panel B
shows the results considering a quadratic polynomial. The running variable is
defined as the difference in log between the discontinuity of R$142,857 and the
maximum amount spent by any candidate in a given municipality in the 2012
elections. The baseline mean is calculated for the control group for the period
2010-2015. ***, ** and * represent 𝑝 < 0.01, 𝑝 < 0.05 and 𝑝 < 0.1, respectively.
37
Table D.3: Effects of campaign spending limits on education
performance, state schools
Approval Rate Failure Rate Dropout Rate

(A) Linear
(1) (2) (3) (4) (5) (6)
-0.260 -0.587 0.190 0.209 0.070 0.466

Estimate
(0.944) (0.721) (0.500) (0.453) (0.861) (0.723)
Robust p-value 0.634 0.433 0.618 0.698 0.836 0.582
Manual Optimal Manual Optimal Manual Optimal
Bandwidth
0.60 0.90 0.60 0.69 0.60 0.77
Baseline Mean 94.90 94.90 4.08 4.08 6.03 6.03
Effect over Baseline -0.3% -0.6% 4.7% 5.1% 1.2% 7.7%
Observations 5,553 5,553 5,553 5,553 5,553 5,553
Approval Rate Failure Rate Dropout Rate

(B) Quadratic
(1) (2) (3) (4) (5) (6)
0.612 -0.374 -0.355 0.098 -0.257 0.314

Estimate
(1.287) (1.023) (0.712) (0.536) (1.243) (0.885)
Robust p-value 0.223 0.827 0.367 0.857 0.420 0.847
Bandwidth
0.60 1.22 0.60 1.15 0.60 1.36
Baseline Mean 94.90 94.90 4.08 4.08 6.03 6.03
Effect over Baseline 0.6% -0.4% -8.7% 2.4% -4.3% 5.2%
Observations 5,553 5,553 5,553 5,553 5,553 5,553
Notes: This table reports the estimated coefficients of the effect of campaign spending limits on
education outcomes for state-managed schools. Data on school performance for 2020 is collected
from INEP (Instituto Nacional de Estudos e Pesquisas Educacionais Anísio Teixeira). As a dependent
variable, I consider approval, failure, and dropout rates of secondary schools. I estimate the spec-
ification described in Equation 1, where odd columns show the results considering a bandwidth
of 0.6, while even columns consider the optimal choice of bandwidth proposed by Calonico,
Cattaneo and Titiunik (2014). Panel A shows the results considering a linear polynomial, and
Panel B shows the results considering a quadratic polynomial. The running variable is defined as
the difference in log between the discontinuity of R$142,857 and the maximum amount spent by
any candidate in a given municipality in the 2012 elections. The baseline mean is calculated for
the control group for the period 2010-2015. ***, ** and * represent 𝑝 < 0.01, 𝑝 < 0.05 and 𝑝 < 0.1,
respectively.
38
Cover Letter
To the Editor
The Journal of Politics
Dear Editor,
I would like to submit an original research article entitled "Why Don’t You Get a Job? Evidence
from Campaign Spending Limits" for consideration by The Journal of Politics. I confirm that this
work is original and has not been published elsewhere, nor is it currently under consideration
for publication elsewhere.
In this paper, I analyze how campaign spending limits affect the selection of workers in the
public sector as a reward for political support. To establish causality, I rely on an institutional
rule limiting the spending level allowed for mayoral candidates that generates a discontinuity
design. Combining electoral data on the composition of municipal alliances, 80,000 campaign
donors, and Brazilian administrative labor market registries, I find that being a member of
the winning candidate’s coalition leads to a 12 percent increase in the likelihood of public
sector employment in municipalities exposed to the spending cap. Exploring the character-
istics of the positions, I then show that employment is concentrated in technical-ranked jobs
and distributed to non-ideologically connected donors, suggesting that discretionary appoint-
ments are widely used to benefit political allies. The increased allotment of public jobs also
results in substantial deterioration in policy outcomes, namely health and education indicators.
I have no conflicts of interest to disclose. Thank you for your consideration of this manuscript.
Kind Regards.
Anonymous Manuscript - Reviewer Copy
Why Don’t You Get a Job? Evidence from

Campaign Spending Limits
October 3, 2022
Abstract
Regulations concerning the funding of election campaigns play a critical role in safe-
guarding the integrity of political processes and institutions in any democracy. However,
despite its diffusion, we know little about how politicians respond to financial constraints
and whether this response has long-term political consequences. I analyze how spending
limits affect the selection of workers in the public sector as a reward for political support.
To establish causality, I rely on an institutional rule limiting the spending allowed for
mayoral candidates. Combining electoral data and Brazilian administrative labor mar-
ket registries, I estimate a positive effect of 12 percent in the likelihood of public sector
employment for members of the winning candidate’s coalition. I then show that em-
ployment is concentrated in technical-ranked jobs and distributed to non-ideologically
connected donors. The increased allotment of public jobs also results in substantial de-
terioration in policy outcomes, namely health and education indicators.
Keywords: Campaign Spending Limits; Public Sector Employment; Patronage, Public
Goods Provision.
JEL Classification: D72; H11; H75; I25.
1
1 Introduction
The question of how to deal with money in politics frequently provokes vigorous discussions
with mixed points of view. (Broberg, Pons and Tricaud, 2022). On the one hand, propo-
nents of a restricted regulation consider campaign contributions as a condition of political
expression by citizens and a possibility for candidates to introduce the administration plans
to the electorate (Bailey, 2004). On the other hand, supporters of more robust limitations
claim that the unlimited use of campaign resources may result in profligate competition and
stimulate the capture of the democratic process by wealthy individuals and interest groups
(Grossman and Helpman, 1996, 2001). Nevertheless, while the literature analyzing the rela-
tionship between campaign finance and electoral outcomes is well established, we have little
compelling empirical evidence on how candidates respond when faced with a financial con-
straint. Are public sector appointments used as a bargaining chip for political backing from
supporting members? Is patronage the ruling mechanism by which political discretion in
hiring decisions is employed? From a public policy perspective, do appointments negatively
affect the provision of public goods?
A stylized fact documented by economics and political science scholars is that politicians
allocate public sector appointments to political backers in exchange for a broad spectrum
of political favors, namely assisting with campaigns, boosting electoral mobilization, and
raising financial resources (Folke, Hirano and Snyder, 2011; Grindle, 2012; Pierskalla and
Sacks, 2020; Brassiolo, Estrada and Fajardo, 2020; Huber and Ting, 2021, to cite only a
few).1 Nonetheless, although some discretion empowers bureaucrats to select personnel
who are judged skillful and committed to accomplishing the designated job (Rauch and
Evans, 2000), patronage practices are especially troublesome for three main reasons. First,
patronage nominations open the door to further illicit uses of public resources, such as
administrative mismanagement, pork-barrel expenditures, and other predatory connections
(Kopeckỳ, Mair and Spirova, 2012). Second, recruiting inexperienced individuals to public
governance makes it simpler for politicians to access resources and reallocate them based on
affinity parameters (Boix and Stokes, 2007). Third, patronage can potentially influence both
the quality of electoral competition and the quality of democracy, such as compliance and
1 Throughout the paper, I use "political backers," "political supporters," "campaign donors," "cam-
paign contributors," and "political allies" interchangeably.
2
representation (Finan, Olken and Pande, 2015).
In this paper, I provide a novel empirical documentation of the relationship between cam-
paign spending limits and political favoritism of contributors on public sector employment.
I build a dataset combining electoral results, detailed campaign donations registries from
270,000 contributors, and individual-level administrative labor market records covering the
entire population of formal workers in Brazil for the period 2010-2019.2 The richness of
these datasets allows me to collect information from members of the winning candidates’
coalitions and thus investigate whether there is a favor in accessing public jobs in addition
to a detailed description of the political supporters’ appointments. Notably, the availability
of data on the totality of public occupations enables me to evaluate the question of political
connections at all levels of the public bureaucracy, from high-level administrative jobs to
intermediate-tier bureaucracies and front-line supplier occupations.
Identifying how campaign spending caps affect the selection of public personnel is a
challenging task for several reasons. First, despite the widespread of some sort of campaign
finance law worldwide, these regulations are typically implemented simultaneously over the
territory, making their evaluation troubling (Barber, 2022). Second, the allocation of public
offices can be correlated with the candidate’s unobservable political preferences, harming the
causal interpretation of the estimated results (Brollo, Forquesato and Gozzi, 2017). Third, the
allotment of public servants to specific positions may result only from an attempt to improve
organizational cohesion by nominating ideologically-connected individuals (Spenkuch, Teso
and Xu, 2021). Fourth, bureaucrats can hold more precise information about their supporters
regarding parameters naturally complex to observe, namely motivation, commitment, and
compliance (Lewis, 2007). Fifth, accurately mapping campaign contributors to labor market
records requires access to individual-level data that is difficult to collect (Colonnelli, Prem
and Teso, 2020).
To causally estimate the impact of the spending ceiling, I take advantage of an electoral
reform passed in 2015 in Brazil that capped the spending allowed by mayoral candidates.
In particular, the Brazilian Congress passed an electoral Law specifying the limit of cam-
paign spending from the 2016 elections based on the highest registered expenditure in the
2012 elections. This municipality-specific regulation generated an exogenous discontinuity

2 I am able to correctly match campaign donors across datasets using a unique tax identifier that is
included in both datasets.
3
regarding the maximum spending permitted in the 2016 municipal elections (Avis et al.,
2021).3 I implement a Regression Discontinuity Design (RDD) approach that explores the
difference between the highest amount spent by a mayoral candidate and the discontinuity
generated by financial reform. In other words, I compare the likelihood of public sector
employment of campaign donors in municipalities slightly above and below the monetary
threshold. Consequently, any differential in hiring can be attributed to differences in the
amount spent during the election campaign as long no other factors change at this cutoff.
By implementing the regression discontinuity estimation, I find that implementing
spending caps positively affects the public sector hiring of campaign donors. Specifically, the
likelihood of employment in the municipal administration increases by roughly 2.3 percent-
age points, translating into an effect of 12 percent over the baseline mean. Earnings gains
of 16 percent also follow the increase in the likelihood of employment. Robustness tests
indicate that the estimated coefficients are stable and statistically significant across different
specifications.
Next, I shed light on potential mechanisms by examining whether patronage is the chan-
nel behind the results. I proceed with the analysis through three empirical tests exploring
the granularity of labor market registries. First, I explore the categorization of jobs by taking
advantage of the ISCO-88 classification, in which I rank the positions based on the tech-
nical requirements needed for their fulfillment. On top of that, I assess how politicians
distribute public sector positions among professional and managerial, technical and super-
visory, and skill-intensive blue-collar occupations. Second, I evaluate whether the selection
preference is determined by ideological aspects, potentially eliminating patronage as the
ruling mechanism. I separate campaign donors into ideologically (or not) connected to the
mayoral candidates to estimate whether the likelihood of employment differs among these
two groups. Additionally, I investigate whether contributors are allocated to the public ad-
ministration in bordering municipalities. Lastly, I estimate the extent to which politicians
influence the allotment of public jobs by exploring the character of the selection process by
dividing positions into discretionary and meritocratic appointments. In line with patronage
practices, I only find a positive effect for technical, non-ideologically connected to the mayor,
3 The Law specified the limit of R$100,000 (around $18,000) or 70 percent of the highest amount spent
reported by a candidate in the 2012 municipal elections. Accordingly, the electoral reform generated
a discontinuity in the maximum permitted spending of around R$142,857 (roughly $25,000) since 70
percent of R$142,857 is equivalent to R$100,000.
4
and discretionary ones.
An immediate question that follows is whether discretionary arrangements affect the
provision of public services. Empirical evidence in such regard is still scarce, and the
documented results point in different directions. One possibility is that the appointments
can improve the performance of the public administration. As most allocated jobs do not
enjoy contractual stability, employees may exert greater effort to preserve their positions
(Khan, Khwaja and Olken, 2019), or increase work productivity by integrating managerial
talents into the bureaucracy (Fenizia, 2022). Alternatively, the inflated political patronage in
Brazilian municipalities negatively affect long-term outcomes, namely fewer years of formal
schooling and higher mortality rates (Barbosa and Ferreira, 2019). Further, political turnover
affects the substitution of principals and teachers in municipal schools, consequently re-
sulting in adverse effects on the public education provision (Akhtari, Moreira and Trucco,
2022).
By taking advantage of a comprehensive variety of Brazilian data on policy outcomes, I
estimate the effect of patronage practices on a set of health and education outcomes.4 I find
a positive effect of 18 percent for the share of children with low birth weight and an increase
of 26 percent in infant mortality. Regarding education outcomes, I estimate a 26 percent and
a 32 percent increase in school failure and dropout rates, respectively. Taken together, the
results suggest that patronage not only distorts the allocation of public sector positions, but
also reduces the provision of public services.
This paper advances a growing literature but mostly concentrated on understanding
electoral consequences of campaign finance restrictions. Avis et al. (2021) and Fouirnaies
(2021) document an increase in competitiveness by attracting more contenders and a re-
duction in incumbency advantage, i.e., lowering reelection rates. Gulzar, Rueda and Ruiz
(2021) find that more flexible constraints increase the number of public contracts allocated to
supporters of the winning candidate. Cagé, Le Pennec and Mougin (2022) also provides evi-
dence that restricting corporate contributions discourages candidates from advertising their
local presence during the campaign by studying the impacts of a French veto on corporate
contributions.
4 Avis et al. (2021) also analyze health and education outcomes, finding null effects. However, the
short time between the implementation of the electoral reform and the implementation of the study
(approximately two years) may explain why these indicators did not respond in the short term.
5
This paper also communicates with a recent body of research on the personnel economics
of the state (see Finan, Olken and Pande (2015) for a detailed discussion). Empirical evidence
in this strand of literature has investigated the importance of political ties in the appointment
and performance of public sector workers (Dal Bó, Finan and Rossi, 2013; Khan, Khwaja and
Olken, 2019; Fisman and Wang, 2017; Deserranno, 2019; Ashraf et al., 2020; Weaver, 2021;
Marx, Pons and Rollet, 2022), the effect of political leadership over the public management
(Ornaghi, 2016; Gulzar and Pasquale, 2017), and officials’ administrative approaches and
effectiveness (Best, Hjort and Szakonyi, 2017; Rasul and Rogger, 2018). This paper is also
closely related to four studies investigating the role of political connections in public sector
employment in Brazil. Brollo, Forquesato and Gozzi (2017) and Barbosa and Ferreira (2019)
document a substantial increase in public sector employment among allies of the ruling
party. Of particular relevance for my paper is the evidence provided by Colonnelli, Prem
and Teso (2020) and Akhtari, Moreira and Trucco (2022), which shows that political ties are a
significant and meaningfully determinant of employment in public institutions and political
discretion negatively impacts public education provision in Brazil, respectively.
2 Institutional Background
In this section, I describe the Brazilian context, which provides several features of political
institutions, both formal and informal, that allow an empirical analysis of patronage. First, I
discuss the functioning of Brazilian elections, the public sector hiring structure, and present
anecdotal evidence about public sector employment being discretionally used as a return to
political support. Second, I describe the electoral financial reform in 2015, which I explore
as an identification strategy.
2.1 Municipal Elections and Local Governments
Elections in Brazil are carried out through direct, secret, and mandatory voting for citizens
aged 18-70 and are held every four years. Except for the office of senator, which has terms of
8 years, the other elective positions have a four-year mandate. The election takes place in a
single round for positions related to the legislative power (senators, federal/state deputies,
and councilors). There can be a second round for executive power positions (president, state
governors, and mayors) if the first candidate does not reach more than 50 percent of the
6
votes in the first round. Nevertheless, the eligibility for the second round is restricted to
municipalities with more than 200,000 registered voters (approximately 1.7 percent of the
total number of Brazilian municipalities). If elected, presidents, governors, and mayors can
only be reelected for one additional term. Candidates for any office are affiliated with a
political party (approximately 30 parties). All political parties receive party fund resources
(roughly $145 million for the 2016 elections) and access to the media (radio and TV) during
the election campaign period.5
Every candidate must be a member of a registered party to run for public office. According
to the electoral regulations stated by the Superior Electoral Court (TSE), a candidate must be
associated with a political party for at least six months before the contest. Because municipal
elections are the first political campaign for the great majority of those standing for public
office, there is a fresh wave of affiliates during municipal elections. Nevertheless, because
all political parties are somewhat tiny, candidates significantly rely on political coalitions to
maximize their election odds. Political alliances are lawfully and independently established
in each municipality a few months before each election6 During the election campaign,
these political alliances may offer a candidate various advantages, including the support of
a more significant number of backers and donors. They may also assist elected candidates
throughout the mayoral term, albeit political parties are unrestricted to alter alliances at that
point.
The Federal, State, and local governments obtained autonomy from the 1988 Federative
Pact. The 5,570 municipalities are not directly governed by the States (26 and the Federal
District), as in most federations. Municipalities are granted the status of federal entities at
the same level as the states and are constituted by an organic law, which must comply with
federal and state constitutions. Although there is a large discrepancy in several characteristics
such as geographic area, population, and social indicators, all Brazilian municipalities enjoy
5 Access to public resources by political parties is guaranteed by the Party Fund (Fundo Partidário),
created by the Federal Constitution of 1988. Currently, 35 parties are officially registered on the
Superior Electoral Court (TSE), which all receive monthly amounts transferred by the Electoral Justice.
The Party Fund’s source of funds comprises budget allocations from the Union, fines imposed by the
Electoral Court, and donations, among others.
6 Brazilian electoral law allows parties to publicize the political agendas of their mayor and mu-
nicipal councilor candidates on radio and television for 45 days before the municipal elections. Each
party is entitled to up to 70 minutes of insertions every day. 90 percent of the time is allocated
according to the number of MPs each party has in the Federal Congress. The remaining 10 percent is
allocated evenly. If there is a coalition of parties in the majority elections, the total of federal deputies
connected with the coalition’s six main parties will be considered (Barbosa and Ferreira, 2019).
7
similar legal status. The Brazilian Constitution of 1988 also determines which activities are
regulated exclusively at the Federal, State, and municipal level. Municipal governments
are responsible for providing public goods of local interest, such as public transport, early
childhood and primary education programs, basic health care services, and the management
of urban planning. States are responsible for providing secondary education, implementing
and maintaining more complex health services, and security through the military and civil
police. In turn, the Federal Government is mainly responsible for creating and implementing
education and health policies, managing public universities, and defining the public budget.
2.2 Hiring in the Public Sector
In the Brazilian context, there are three ways in which a citizen can assume a position in
the public sector: through formal examinations (concurso público), commissioned positions
(cargos comissionados), and positions of trust (cargos de confiança). The first one, via a formal
examination, consists of a selection process that takes place with the publication of a public
statement, a formal document that establishes all the rules for the selection (minimum
education required, number of vacancies, the content of the exam, schedule of the selection
process, among others).7 In general, the specialized media widely publicizes public tender
notices, which results in high participant enrollment rates, even for lower-paid positions.
Candidates approved in this initial phase have the possibility of receiving a tenure after
three years (probationary period) unless candidates are prosecuted and convicted for some
act of mismanagement.
Unlike the selection by public examinations, there is also the possibility of discretionary
hiring of individuals through commissioned positions and positions of trust. Commissioned
positions and positions of trust are generally held temporarily by public officials and em-
ployees appointed by a higher authority. Put differently, these positions are those whose
admission process passes directly through free choice, hiring, and dismissal, in which there
is no need to pass a public contest or other specific selection processes.8

7 Formally, Law 8,112/1990, which regulates the work regime for federal public servants, es-
tablishes the following requirements for entering a public office through competitive examination:
having Brazilian nationality; enjoying political rights; being up to date with military and electoral
obligations; having the level of education required; be at least 18 years old; demonstrate physical and
mental conditions for the job. See http://www.planalto.gov.br/ccivil_03/leis/l8112cons.htm,
accessed March 13, 2022.
8 See http://www.planalto.gov.br/ccivil_03/constituicao/emendas/emc/emc20.htm, ac-
8
Anecdotal evidence on the use of public office exclusively as a return for political support
is recurrent and widely recognized in society. For example, the Public Ministry (MP), the
public body responsible for denouncing acts of mismanagement and corruption against
public agents, initiated a lawsuit against the mayor of Campinas (State of São Paulo), Jonas
Donizette (Brazilian Socialist Party, PSB).9 In the civil action, the MP accused the mayor of
creating 846 positions of free appointment (commissioned and trusted positions), a number
incompatible with the size of the bureaucratic structure of the municipality. In particular,
according to the MP, the officials themselves admitted that they were hired in exchange for
political support during the electoral campaign or for belonging to the "nomination quota"
of the political parties supporting the mayor. As a consequence of the lawsuit, the Court of
Justice of the State of São Paulo decreed the impeachment of the mayor for administrative
impropriety. The conviction imposes the loss of public service, suspension of political rights
for five years, and a fine of 30 times his paycheck, in addition to the dismissal of the 846
illegally hired civil servants. Moreover, the mayor was also prohibited from receiving tax
benefits for a period of three years. Appendix A describes several additional anecdotal
evidence of public office offered in exchange for political support.
2.3 The 2015 Campaign Finance Reform
Of 180 countries with the minimum conditions for electoral competition, 46 percent adopt
some political finance regulation regarding public and private funding, spending and re-
porting, oversight, and sanctions mechanisms. In general, the criteria for calculating the
spending caps are the type of job in dispute (57 percent), the fixed spending limit (51 per-
cent), and the number of voters in the district (24 percent) (Casas-Zamora, 2016). Figure A.5
provides a more detailed overview of the context of campaign spending limits for different
countries. Although political parties do not deal with campaign spending restrictions in
most countries (Panel A), candidates for public office face a spending limitation and a need
to report the content of their spending to the local electoral authorities (panels B and D).
In an attempt to alleviate economic inequality between candidates and reduce the distor-
tion of the electoral process as a result of the influence of large amounts of money donated by
cessed March 13, 2022.
9 See https://g1.globo.com/sp/2015/07/mp-pede-condenacao-por-uso-politico-de-cargos.html,
accessed March 13, 2022.
9
private companies, in 2015, the Brazilian congress implemented an electoral law specifying a
limit on campaign spending.10 This decision came in the wake of the serious revelations of an
extensive corruption case, Petrolão (Big Oily), investigated by the world-renowned Operação
Lava Jato (Car Wash Operation).11 Law N. 13,165/2015, in its Articles 5 and 8, established
the limit of R$100,000 (approximately $18,000) or 70 percent of the highest amount spent
declared by a candidate in the previous election. Thus, the new Law created a kink in the
maximum allowable spending amount of around R$142,857 (approximately $25,000) since
70 percent of R$142,857 is equal to R$100,000. Put differently, for any value below R$142,857,
the limit is set at R$100,000, while for values above, the limit is set by 70 percent of the highest
amount spent during the 2012 elections.12
To account for the monetary devaluation between 2012 and 2016, the Law determined
that the cases in which the spending limit falls within the 70 percent rule must be adjusted
for inflation accumulated in that period. On the other hand, the spending limit was adjusted
by 33.7 percent. For municipalities limited to R$100,000, the adjustment was 8.04 percent
(equivalent to R$108,039), referring to December 2015 (the month in which the Law was
approved) and October 2016 (the election period). Consequently, the inflation correction
shifted up the campaign spending limits by approximately 24 percent at the R$142,857 cutoff
(Avis et al., 2021).
To provide a panorama of the functioning of the electoral finance reform, in Figure 1, I
depict the relationship between the maximum amounts spent by mayoral candidates for the
2012 and 2016 elections.13 Consistent with the restrictions imposed by the new electoral rule,
10 Until the 2012 municipal elections, mayoral candidates and local council candidates could collect
campaign contributions from firms and citizens. Corporate donations were prohibited under Law
13.165/2015.
11 The Operação Lava Jato was a set of investigations carried out by the Federal Police of Brazil (PRF)
to investigate a money-laundering scheme that handled approximately 10 billion reais in bribes. The
PRF has served more than a thousand search and seizure, temporary arrest, preventive arrest, and
coercive arrest warrants for clarification of possible cases of corruption. The operation began on
March 17, 2014, with 80 operational phases in total. The operation ended on February 1, 2020, after
more than 100 people were arrested and convicted, including politicians, civil servants, and high-
ranking employees of companies in the construction sector. The operation’s name is due to the use
of a gas station to move amounts of illicit origin, investigated in the first phase of the operation. See
http://especiais.g1.globo.com/politica/2015/lava-jato/linha-do-tempo-da-lava-jato/
(accessed March 14, 2022) for a more detailed description of the investigation timeline.
12 See http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2015/lei/l13165.htm (ac-
cessed March 14, 2022) for a complete description.
13 Figures A.6 and A.7 display the spatial dispersion of the municipalities exposed to the spending
limit (extensive margin) and the variation of the maximum value for the municipalities of the treated
group (intensive margin), respectively.
10
we observe that for municipalities with maximum spending below R$142,857 in the 2012
elections, the maximum spending in the 2016 elections is limited to R$108,039 (equivalent
to R$100,000, adjusted for accumulated inflation between 2012 and 2016). For municipalities
with a maximum expenditure greater than R$142,857 in 2012, there is a sharp increase in the
amount allowed, capped to the limit of 70 percent determined by the Law. Regarding the
enforcement that candidates and political parties face by providing a detailed description of
the content of campaign expenditures, the Superior Electoral Court (TSE) tightly regulates
the process to avoid potential unofficially recorded expenses.14 In case of non-compliance
with the established rule, the candidate is subject to the payment of a fine equivalent to 100
percent of the amount that exceeds the maximum amount set.
Figure 1: Graphical description of the 2015 financial electoral reform

400000
300000
200000
100000
0
0 50000 100000 150000 200000

Notes: This figure provides a graphical illustration of the electoral reform in Brazil in 2015. The new
electoral law determined that mayoral candidates can only spend the maximum of either R$100,000
or 70 percent of the highest amount spent by a candidate in the same municipality in the previous
2012 election. The law creates a discontinuity in the amount candidates can spend at approximately
R$142,858 (70 percent of R$142,858 is R$100,000.6). For any value less than R$142,858, the limit is given
by R$100,000, while for higher values, the cap is given by 70 percent of the largest value spent in the
previous election. Data on the maximum amount spent by candidates for mayor in each municipality
in the 2012 and 2016 elections are made available by the Superior Electoral Court (TSE). The vertical
and horizontal axes represent the maximum amount spent in the 2016 and 2012 municipal elections,
respectively. The vertical gray dashed line represents the discontinuity of R$142,857, determined by
the electoral reform.
14 The content of campaign expenditures for all political parties is freely accessible and can be
consulted at https://divulgacandcontas.tse.jus.br/divulga/ (accessed March 28, 2022).
11
3 Empirical Analysis
In this paper, I am interested in testing whether implementing a campaign spending cap
scheme for municipal elections increases the likelihood of public sector employment for
campaign donors. The empirical challenge lies in the difficulty of finding credible exogenous
sources of variations in electoral rules regarding financial restrictions. To establish causality,
I rely on a Regression Discontinuity Design (RDD) exploring the maximum amount spent
on the campaign for the 2012 elections, the basis of my identification strategy. This section
briefly describes the data I use in the analysis, the construction of the running variable, the
estimation strategy, and provides evidence supporting the identification assumptions.
3.1 Data
I rely on several datasets to execute the analysis. The first dataset comes from the Tribunal
Superior Eleitoral (TSE), which provides detailed information on candidate characteristics,
coalition composition, election results, among others. TSE also provides a database with the
record of all campaign donations received by candidates running for all political positions. In
particular, I collect information on the amount donated, the date of donation, the candidate
who received the amount, and the CPF (unique tax identifier) that identifies the citizen
responsible for the financial contribution. To map campaign donors into labor market
records, I resort to administrative data from the Relação Anual de Informações Sociais (RAIS)
for the period 2010:2019, which includes information on the population of formal workers
and firms in the Brazilian labor market. To test potential imbalances in predetermined local
characteristics, I gather data from Perfil dos Municípios (MUNIC) and the Population Census,
made available by the Brazilian Institute of Geography and Statistics (IBGE). Finally, to assess
the effects on the provision of public goods, I collect data from Datasus, made available by
the Ministry of Health, and from the National Institute for Research on Education (INEP),
managed by the Ministry of Education. In Appendix B, I provide a more extensive description
of the datasets I use, the linkage procedures between different datasets, and the construction
of the main outcomes of interest.
12
3.2 Descriptive Statistics
For the final overall sample and the sample disaggregated by treatment status, Table B.1
describes the descriptive statistics for the variables considered in the analysis. Columns (1)-
(2) shows the mean and standard deviation for the entire sample. Columns (3)-(4) and (5)-(6)
depicts the mean and standard error for the municipalities of the treated and control groups,
respectively, while Column (7) presents the standard difference between these two groups.
Column (8) reports the p-value of the mean comparison between treated and control groups.
Panel A presents the characteristics at the candidate level. Panel B describes the labor market
outcomes constructed through the RAIS dataset. Panel C represents characteristics at the
municipal level, also used to assess the balance between groups.
Regarding the candidates’ characteristics, the aspirants running for mayor are on average
49 years old, primarily men (87 percent), predominantly white (66 percent), and mostly in
their first term (59 percent). Specifically for the political supporters of the mayoral candidates
mapped in RAIS, the overall average public sector employment is approximately 24 percent,
slightly higher for the municipalities of the treated group (22 percent) than the control group
(20 percent). The same pattern is observed when disaggregating the positions in the public
sector between different levels of technical skills. The average monthly earnings for the
general sample is approximately R$3,465, equivalent to US$676. Finally, the different groups
of municipalities are very similar in terms of characteristics, such as Gini coefficient, income
per capita, illiteracy rate, and unemployment rate, among others. It is important to note that
the p-value of the sample mean comparison for the two groups is higher than 0.1 for most
variables.
Suggestive Evidence. Preliminary evidence on the relationship between the exposure to
campaign spending limits and the likelihood of employment in the public sector is exhibited
in Figure 2. In particular, we observe the trend of the outcome of interest over the years
considered in the sample (2010-2019), comparing treated and control groups. For the years
before the Law’s approval, both treated and controls groups show a reasonably parallel trend
in the use of public sector employment as a return for political support, corroborating the
absence of an anticipatory effect. After the 2016 elections, we notice clear suggestive evidence
of an increase in the probability of public sector employment for supporting members of
13
mayoral candidates in municipalities with a maximum campaign expenditure greater than
R$142, 857 in the 2012 elections. Though informative, it is essential to reinforce that this
association does not support any causal claim. In other words, public sector employment is
likely to reflect confounding factors that may differ between municipalities with higher or
lower levels of reported campaign spending.
Figure 2: Preliminary evidence on the public sector employment

.28
.27
.26
.25
.24
.23
.22
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Years
Control Treated
Notes: This figure represents the campaign donors’ likelihood of employment in the public sector
comparing treated (red line) and control (blue line) groups for the period 2010–2019. Data on cam-
paign donors is made available by the Superior Electoral Court (TSE), which contains information on
the donor’s name, CPF (unique tax identifier), amount donated, and the recipient mayoral candidate.
Sociais (RAIS), in which it is possible to perfectly link individuals through the CPF. The vertical and
horizontal axes represent the probability of public sector employment and calendar years, respec-
tively. The dashed vertical gray line indicates the first municipal election after the implementation of
campaign spending limits.
3.3 Estimation Strategy
Regression Discontinuity Approach. Identifying the causal effect of the implementation of
campaign spending on political favoritism in public sector employment is not a trivial task.
Particularly, the simple comparison between municipalities with higher or lower levels of
campaign spending can lead to spurious results due to several factors. First, unobservable
municipal-level characteristics and political preferences can be correlated with public sector
14
employment. Second, as I consider in the analysis of the pool of campaign backers for
mayoral candidates, more popular political parties may have a greater ability to attract
political supporters, increasing the probability of winning the election (Brollo, Forquesato
and Gozzi, 2017).
To avoid the aforementioned potential concerns, I take advantage of an electoral law
implemented by the Brazilian Federal Government that limited campaign spending from the
2016 elections. The new Law determined a discontinuity for municipalities where at least
one candidate spent more than R$142,857 in the 2012 elections, allowing me to implement a
Regression Discontinuity Design (RDD). In doing so, I explore the exogenous discontinuity
at R$142,857 for the 2012 elections, where the spending limit shifts up by roughly 24 percent
and then increases linearly as established by the Law (Avis et al., 2021). The identification
of the causal effect is based on two assumptions. The first one determines that the direct
marginal effect of the running variable on baseline characteristics is statistically equal to
zero. Second, the density of the running variable must be smooth at the cutoff (Imbens and
Lemieux, 2008). These two assumptions seem particularly suitable for the scenario, as the
electoral reform passed in late 2015 was based on campaign spending levels from the 2012
elections, eliminating a potential anticipatory channel.
Intuitively, the treatment effect of spending ceiling on outcome 𝑌 can be expressed as
𝑇𝐸 = lim𝐾2012 ↓0 𝐸[𝑌|𝐾2012 ]−lim𝐾2012 ↑0 𝐸[𝑌|𝐾 2012 ], where 𝑌 is the outcome of interest and 𝐾 2012 is
the running variable, defined as the difference in log between the discontinuity of R$142,857
and the maximum amount spent by any candidate in municipality 𝑚 in the 2012 elections,
as each function approaches towards to zero. Formally, let 𝑌𝑖,𝑚,𝑡 be the outcome of interest
of individual 𝑖, municipality 𝑚, in period 𝑡 and 𝐾 2012 the running variable. I estimate the
following regression, considering a bandwidth range given by (𝐾 2012 − 𝛿, 𝐾 2012 + 𝛿):
𝑌𝑖,𝑚,𝑡 = 𝛽 𝑅𝐷𝐷 1[𝐾 2012 ≥ 0] + 𝑓 (𝐾 2012 ) + 𝜑𝑋𝑖𝑡 + 𝜀𝑖,𝑚,𝑡 , (1)
in which 1[𝐾 2012 ≥ 0] is an indicator variable for being above the cutoff, and 𝑓 (𝐾 2012 ) is a
smooth continuous function of the running variable. The vector 𝑋𝑖𝑡 is a set of municipal and
candidates characteristics that are likely to affect the outcome of interest, and 𝜀𝑖,𝑚,𝑡 is the clus-
tered error term of individual 𝑖, municipality 𝑡, in period 𝑡, assumed to be uncorrelated with
the outcome 𝑌𝑖,𝑚,𝑡 . The baseline estimation considers a triangular kernel and a bandwidth of
15
0.6 for all outcomes analyzed in this paper.15 To ensure that the results are not conditional to
the bandwidth selection, I also compute the outcome-specific optimal bandwidth following
Calonico, Cattaneo and Titiunik (2014). For each side of the cutoff, I separately estimate first-
and second-order polynomials (Gelman and Imbens, 2019). The 𝛽 𝑅𝐷𝐷 parameter, the change
at the zero threshold of the conditional expectation function, captures the causal effect of
restricting campaign spending on the outcomes of interest. However, it is important to rec-
ognize that the estimation in Equation 1 provides a local treatment effect so that nothing can
be said about the entire set of municipalities exposed to the spending caps.16 In Appendix
B, I provide a set of empirical tests that supports the identification assumptions required for
the estimation strategy I employ in this paper.
Event-Study Analysis. The annual frequency of the main outcome of interest permits me
to assess how the treatment affects the probability of campaign contributors’ employment
in the public sector after implementing a campaign spending limit regulation and how the
effect evolves over time. Therefore, in addition to reporting the results based on the RDD
estimation, I also present the results through local event-study analysis. Formally, I estimate
the following disaggregated difference-in-differences equation:
𝑇=3
Õ 𝑇=3
Õ
𝑌𝑖,𝑚,𝑡 = 𝛼 + 𝜇𝑚 + 𝛿 𝑡 Time𝑡 × Treat𝑚 + 𝜆𝑡 + 𝜀𝑖,𝑚,𝑡 (2)
𝑡=−6,𝑡≠−1 𝑡=−6
where the subscript 𝑖 identifies the municipalities, and 𝑡 identifies the calendar years con-
sidered in the analysis (2010-2019). Treat𝑖 is a binary variable indicating the treatment group
(municipalities with maximum campaign spending above R$142,857 on the 2012 elections),
and Time𝑡 indicates each period 𝑡, defined by calendar years relative to the 2016 elections.
Municipal fixed effects 𝜇𝑚 capture unobserved heterogeneity, whereas the 𝜆𝑡 fixed effects
15 The reason for the fixed bandwidth choice of 0.6 is that it is approximately the average of the
different individual optimal bandwidths for the outcomes of interest.
16 The empirical strategy employed in this paper relies on a regression discontinuity design. Con-
sequently, the average treatment effect is calculated by restricting the full sample of municipalities to
a support of the distribution of the running variable close to the cutoff. A caveat of this design if the
lack of external validity of the estimates I find through the specification expressed in Equation 1. To
assess this potential concern about the validity of the results, I report the estimated results through
an OLS estimation. Specifically, I consider a linear regression including an indicator variable that
assumes a value equal to 1 if the municipality is exposed to spending restrictions and year and party
fixed effects. The results are reported in Table C.2. Additionally, in Table C.3, I report the results of
the Omitted Variable Bias test proposed by Oster (2019), which evaluates the stability of the estimated
coefficient through the OLS regarding potential confound factors.
16
absorb time-varying shocks. The coefficients 𝛿0 , ..., 𝛿𝑇 identify dynamic treatment effects
after the 2016 elections, 𝛿−1 is the omitted baseline, and 𝛿−𝑃 , ..., 𝛿−2 estimate anticipatory
effects. In other words, the latter coefficients test whether treatment and control groups
follow a similar trend before the law, providing a test for the common-trend assumption.
𝜀𝑖,𝑚,𝑡 is the error term of individual 𝑖, municipality 𝑚, in period 𝑡.17 To summarize the local
average treatment effects, I estimate the following equation:
𝑌𝑖,𝑚,𝑡 = 𝛽 𝐷𝐷 Post𝑡 × Treat𝑚 + 𝜇𝑚 + 𝜆𝑡 + 𝜀𝑖,𝑚,𝑡 (3)
where Post𝑡 identifies the post-treatment period following the 2016 elections and 𝛽 is the
main coefficient of interest.
4 Results
In this section, I present the main results of the paper through the RDD design. First, I discuss
the first stage estimates. Next, I examine the effects on public sector employment and earnings
as a consequence of implementing campaign spending limits through a discontinuity design-
based estimation. Lastly, I explore the temporal dynamics of the results through event studies
analysis.
First Stage Estimates. As discussed in Section 2, for municipalities with a maximum cam-
paign spending greater than R$142,857, the spending limit allowed for the 2016 elections
is 70 percent of the highest value registered in 2012. Consequently, we expect a positive
shift considering the maximum amount spent in the 2016 elections as a dependent variable.
Table 1, Columns (1)-(2), confirms this hypothesis, in which we observe an increase in the
maximum amount spent in the 2016 elections for the municipalities exposed to the electoral
regulation. In particular, the coefficient estimated through the baseline specification (first-
order polynomial and bandwidth of 0.6) is statistically significant (at the 1 percent level) and
indicates an increase of R$17,000 in the maximum amount in the 2016 elections, implying an
17 An advantage of the research design is that the treatment takes place only in one period, specif-
ically the 2016 elections. Consequently, there is no concern about the problem of negative weights
raised by the recent literature on the estimation of dynamic treatment effects in two-way fixed effects
settings since the proportion between the time in which units are treated in the panel is the same
for all individuals. Nonetheless, in Appendix C, I show that negative weight issues are not present
following the diagnoses proposed by De Chaisemartin and d’Haultfoeuille (2020) and Callaway and
Sant’Anna (2021).
17
effect of approximately 16 percent over the baseline mean. The point estimate is also robust
to different specifications (second-order polynomial and optimal bandwidth choice).
4.1 Effects on Public Sector Employment
Table 1, Columns (3)-(4) and (5)-(6), present the results on the effect of implementing cam-
paign spending limits on the likelihood of public sector employment and monthly earnings,
respectively. The reported coefficients 𝛽 𝑅𝐷𝐷 , alongside the robust standard errors, are esti-
mated from Equation 1, where Panel A considers a linear polynomial and Panel B considers
a second-order polynomial. Odd columns report the results for a baseline bandwidth of 0.6,
while even columns report the coefficients for the outcome-specific optimal bandwidth. The
running variable is defined as the difference in logs between the discontinuity of R$142,857
and the maximum amount spent by any mayoral candidate in the 2012 elections.
The results reported in Table 1 show a robust positive association between campaign
spending caps and donor’s labor market outcomes (public sector employment and earnings).
For the former outcome, the results obtained from the baseline specification described in
Panel A, Column (3), suggest that after the 2016 municipal elections, the likelihood of being
hired by a public body increases by approximately 2.3 percentage points. This coefficient
translates into an effect over the baseline mean by roughly 12 percent, significant at the
1 percent level. An increase in monthly earnings (constant 2016 R$) by approximately
R$400 (16.2 percent over the baseline mean) reported in Column (5) follows the higher
employment likelihood. As displayed in Columns (4) and (6), the estimates obtained through
the optimal bandwidth selection are very close to those obtained through manual bandwidth.
Consistently, the results reported in Table 1, Panel B, suggest a positive and statistically
significant effect for both outcomes considering a second-order polynomial.
Figure 3 provides a graphical representation of the estimates from Equation 1, in which
I estimate a linear polynomial for each side of the discontinuity.18 The vertical axis plots
the likelihood of public sector employment by campaign donors, and the horizontal axis
plots the running variable. For the pool of donors from municipalities exposed to spend-
ing restrictions, we observe a discontinuous shift in public sector employment at the zero
18 To eliminate valid concerns regarding the results I find to be dependent on parametric specifica-
tions, in Figure C.1, I assess the robustness of the results on public sector employment by fitting a
non-parametric polynomial on each side of the discontinuity.
18
Table 1: Effects of campaign spending limits on labor market
outcomes – RDD estimates
Maximum Public Sector Monthly

(A) Linear Spending Employment Earnings
(1) (2) (3) (4) (5) (6)
16,998 19,415 0.023 0.024 401.27 345.55

Estimate
(20,850) (21,191) (0.006) (0.005) (118.76) (100.16)
Robust p-value 0.024** 0.386 0.000*** 0.000*** 0.000*** 0.014**
Bandwidth
0.60 0.58 0.60 0.68 0.60 0.85
Baseline Mean 108,039 108,039 0.20 0.20 2,479.70 2,479.70
Effect over Baseline 15.7% 18.0% 11.6% 12.1% 16.2% 13.9%
Observations 2,093 2,093 238,674 238,674 87,861 87,861
Maximum Public Sector Monthly

(B) Quadratic Spending Employment Earnings
(1) (2) (3) (4) (5) (6)
95,999 34,411 0.036 0.023 717.93 427.63

Estimate
(42,765) (32,907) (0.015) (0.010) (116.45) (101.24)
Robust p-value 0.000*** 0.365 0.000*** 0.025** 0.000*** 0.035**
Bandwidth
0.60 0.78 0.60 0.76 0.60 1.69
Baseline Mean 108,039 108,039 0.20 0.20 2,479.70 2,479.70
Effect over Baseline 88.9% 31.8% 18.3% 11.7% 29.0% 17.2%
Observations 2,093 2,093 238,674 238,674 87,861 87,861
Notes: This table reports the estimated coefficients of the effect of campaign spending
limits on labor market outcomes of campaign contributors. I estimate the specification
described in Equation 1, where odd columns show the results considering a bandwidth of
0.6, while even columns consider the optimal choice of bandwidth proposed by Calonico,
Cattaneo and Titiunik (2014). Panel A shows the results considering a linear polynomial,
and panel B shows the results considering a quadratic polynomial. ***, ** and * represent
threshold, consistent with the results presented in Table 1.19
4.2 Difference-in-Differences Estimates
The empirical strategy employed in the previous Section relies on a regression discontinuity
design that explores the threshold in the volume of campaign spending in the 2012 municipal
elections. However, this approach has some limitations despite providing an accurate causal
estimate of the treatment. First, the coefficient reported in the previous Section represents
19 In Figure C.2, I provide additional evidence for the identification strategy considering the prob-
ability of public sector employment for 2010-2015 in the y-axis. I do not encounter a meaningful
variation at the zero threshold.
19
Figure 3: Graphical representation of the effects of campaign spending
limits on public sector employment
.36
.32
.28
.24
.2
.16
-3 -2 -1 0 1 2 3
likelihood of employment in the public sector in the 2016 municipal elections as an outcome of interest.
The running variable is defined as the difference in logs between the discontinuity of R$142,857 and
the maximum amount spent by any mayoral candidate in the 2012 elections. Data on campaign
donors is made available by the Superior Electoral Court (TSE), which contains information on the
donor’s name, CPF (unique tax identifier), amount donated, and the recipient mayoral candidate.
Sociais (RAIS) for the period 2016-2019, in which it is possible to perfectly link individuals through
the CPF. The vertical and horizontal axes represent the public sector employment probability and
the maximum amount spent in the 2012 municipal elections, respectively. The solid line represents a
linear polynomial fitted separately on each side of the threshold.
the estimated average effect for the entire period after the 2016 elections without providing
evidence of how the effect behaves in different periods. Second, it is not possible to evaluate
whether the dynamics of the labor market were similar between municipalities exposed
and not exposed to the electoral regulation before the Law’s approval. To circumvent these
limitations, in this section I take advantage of the annual periodicity of the RAIS dataset and
I extend the empirical RDD-based strategy to a Local Difference-in-Differences approach by
estimating Equation 3.
Table C.1, Column (1), presents the result on public sector employment using the DiD
approach. Specifically, the estimated coefficient is in line with that found using the RDD
approach. From the 2016 elections, there is an increase of 2 percentage points in the likelihood
of employment, translating into an effect of 7.7 percent over the baseline mean. The point
20
estimate is statistically significant at the 1 percent level.
Figure 4 illustrates the results estimated using Equation 2, plotting the point estimates for
each year before and after the 2016 elections along with the 95 percent confidence interval.
In particular, I cannot reject the null hypothesis of parallel trends, indicating that the treated
and control groups follow the same trajectory in the likelihood of employment, compatible
with the retroactive nature of the creation of the Law. For the periods after 2016, we observe
a sharp increase in public sector employment, with the estimated coefficients being positive
and statistically significant only from the first year of the subsequent electoral term. This is
a result consistent with the Brazilian institutional context, as elections are held in October,
and elected candidates take office in January of the following year.
Figure 4: Graphical representation of the event study estimates on

the public sector employment
.04
.02
Treatment Effect
0
-.02
-.04
-6 -5 -4 -3 -2 -1 0 1 2 3
Years Relative to 2016 Elections
Notes: This figure shows the estimated coefficients from Equation 2, considering campaign donors’
likelihood of employment in the public sector in the 2016 elections as an outcome of interest. Data
on campaign donors is made available by the Superior Electoral Court (TSE), which contains infor-
mation on the donor’s name, CPF (unique tax identifier), amount donated, and the recipient mayoral
candidate. Information on employment in the public sector is collected from the Relação Anual de
Informações Sociais (RAIS) for the period 2010-2019, in which it is possible to perfectly link individuals
through the CPF. The vertical and horizontal axes represent the probability of public sector employ-
ment and calendar years relative to the 2016 municipal elections. The area enclosed by the dotted
lines represents the 95 percent confidence interval.
21
4.3 Robustness Tests
In Appendix C, I present several robustness tests on potential concerns that could harm the
causal interpretation of the results. First, to avoid potential concerns about our result being
conditional on the choice of bandwidth of the running variable, I estimate the treatment
effects for different sets of bandwidths following Equation 1. I present the results in Figure
C.3, together with the 95 percent confidence interval for each estimated coefficient. Second,
I assess the concern that the results could have been found purely by chance. On top of
that, I randomize the running variable and I perform the estimation following Equation 1 for
the main outcome of interest considering this artificial sample. The results are presented in
Figure C.4. Third, I follow Gerard, Rokkanen and Rothe (2020) and in Table C.5 I show that
the effect on employment in the public sector is robust even when I consider some degree
of manipulation of the running variable. Fourth, in Figure C.5 I address concerns related to
the timing of the elections by showing that no negative weights emerge in my setting and
that my findings are robust to other estimators proposed in this literature.
5 Discussion on Potential Mechanisms
The results presented in the previous section suggest that spending limits positively influence
campaign contributors’ employment in the public sector. To shed light on the mechanisms
determining the selection in the public sector, in this section, I take advantage of the richness
of the labor market registries on contract details and occupations of campaign supporters.
In particular, I evaluate two potential channels. First, the evidence I find in the previous
section may be compatible with a quid pro quo patronage, where politicians use public sector
jobs to reward individuals for their political support Colonnelli, Prem and Teso (2020).
Second, it may be the mayor’s behavior to boost governance unity by appointing ideologically
connected and reliable individuals.
I proceed with the analysis through three empirical tests exploring the granularity of
labor market data. First, I explore the categorization of jobs taking advantage of the ISCO-88,
in which I classify the positions between professional and managerial, technical and super-
visory, and skill-intensive blue-collar.20 Precisely, I assess how employment is distributed

20 ISCO-88 offers a methodology for categorizing and combining occupational data gathered
from administrative records, population censuses, and other statistical surveys. I aggre-
gate the positions as follows: professional and managerial (legislators, senior officials, man-
22
among positions with different technical prerequisites needed for its execution. Second, I
evaluate whether the employment decision is determined by ideological factors, potentially
eliminating patronage as a proposed mechanism. On top of that, I separate campaign donors
into ideologically (and not) connected to test whether employment differs between these two
groups. Additionally, I investigate whether donors are allocated to the public administration
in bordering municipalities. Finally, I estimate the extent to which politicians influence the
allotment of public appointments by examining the character of the selection process by
dividing positions into discretionary and meritocratic.
Differences Across Occupations. The results discussed in the previous section suggest that
campaign spending limits increase the likelihood of public sector employment of members
of the winning mayor in return for political support. Nevertheless, the public office can be
used as campaign promises, eliminating patronage as a potential channel. As documented
in the literature, the latter channel would be more pronounced among high-skilled positions
(Müller, 2006; Brollo, Forquesato and Gozzi, 2017). I test this possibility by taking advantage
of the categorization of jobs ranked according to the level of technical training required for
its routine.
Table 2 presents the estimated results considering the probability of employment by
campaign donors within each level of specialization as a dependent variable. Interesting
results emerge after ruling out this hypothesis. The likelihood of public sector employment
is positive only for medium-ranked positions (Column (3), Panel A). Specifically, I estimate a 3
percentage point increase for this category, implying an effect of 13 percent over the baseline
mean. On the other hand, there is a decrease in the probability of occupying a position
between high and low-skilled jobs (Columns (1) and (5), Panel A). In particular, I find a
decrease of 3 percentage points and 2.7 percentage points for these types of occupations,
meaning a reduction of 9.1 percent and 11.2 percent over the baseline mean, respectively.
Does Ideology Play a Role? The positive effect on public sector employment may result
from a governance strategy focused on increasing the party cohesion of the municipal ad-
agers); technical and supervisory (technicians and associate professionals, clerks, service work-
ers, and shop and market sales workers); skill-intensive blue-collar (skilled agricultural and
fishery workers, craft and related workers, plant and machine operators and assemblers).
See https://www.ilo.org/public/english/bureau/stat/isco/isco88/major.htm for a more in-
depth discussion on the classification of occupations.
23
outcomes – Skill requirements
Professional and Technical and Skill-Intensive

(A) Linear Managerial Supervisory Blue-Collar
(1) (2) (3) (4) (5) (6)
-0.030 -0.033 0.031 0.019 -0.027 -0.044

Estimate
(0.014) (0.014) (0.016) (0.015) (0.016) (0.012)
Robust p-value 0.036** 0.000*** 0.000*** 0.058* 0.019** 0.000***
Bandwidth
0.60 0.57 0.60 0.72 0.60 1.05
Baseline Mean 0.33 0.33 0.24 0.24 0.24 0.24
Effect over Baseline -9.1% -9.8% 13.0% 8.2% -11.2% -18.4%
Observations 57,736 57,736 57,736 57,736 57,736 57,736
Professional and Technical and Skill-Intensive

(B) Quadratic Managerial Supervisory Blue-Collar
(1) (2) (3) (4) (5) (6)
-0.095 -0.074 0.126 0.086 -0.062 -0.053

Estimate
(0.025) (0.018) (0.015) (0.016) (0.026) (0.018)
Robust p-value 0.018** 0.000*** 0.000*** 0.001*** 0.000*** 0.012**
Bandwidth
0.60 0.64 0.60 0.71 0.60 1.39
Baseline Mean 0.33 0.33 0.24 0.24 0.24 0.24
Effect over Baseline -28.5% -22.2% 53.4% 36.3% -25.7% -21.8%
Observations 57,736 57,736 57,736 57,736 57,736 57,736
Notes: This table reports the estimated coefficients of the effect of campaign spending
limits on labor market outcomes of campaign contributors. I estimate the specification
described in Equation 1, where odd columns show the results considering a bandwidth of
0.6, while even columns consider the optimal choice of bandwidth proposed by Calonico,
Cattaneo and Titiunik (2014). Panel A shows the results considering a linear polynomial,
and panel B shows the results considering a quadratic polynomial. ***, ** and * represent
ministration (Spenkuch, Teso and Xu, 2021). Although ideology is an unobservable attribute,
I assess this potential channel through three exercises that shed light on whether mayors
have a preference for like-minded donors. In particular, I split the sample of supporters
into committed and non-committed regarding the recurrence of contributions to the same
political party in the 2012 and 2016 elections. I further verify if there is a differential in
the allotment of public offices in bordering municipalities to which the candidate for mayor
was elected. The rationale of these tests is that if the ideological connection is a noteworthy
aspect in the allocation of appointments, we would observe preferential behavior in favor of
ideologically connected political supporters.
Table 3 displays the estimated results of this examination, suggesting that ideological
24
alignment does not play a role in the distribution of public offices. Specifically, analyzing the
likelihood of employment by comparing committed and non-committed supporters of the
winning mayor, I find a positive effect only for the latter pool of contributors. The estimated
coefficient (Column (3), Panel A) indicates a 3 percentage point increase in employment,
translating into an effect of 12.5 percent over the baseline mean. Further, I estimate an
effectively zero coefficient on the probability of employment in bordering municipalities.
Table 3: Effects of campaign spending limits on public sector

employment – Ideological channels
Financial Non-Committed Committed Bordering

(A) Linear Support Donors Donors Municipalities
(1) (2) (3) (4) (5) (6) (7) (8)
490.64 410.98 0.032 0.044 -0.059 -0.050 0.004 0.004

Estimate
(320.87) (175.54) (0.009) (0.011) (0.016) (0.013) (0.007) (0.007)
Robust p-value 0.072* 0.053* 0.000*** 0.000*** 0.014** 0.000*** 0.614 0.426
Manual Optimal Manual Optimal Manual Optimal Manual Optimal
Bandwidth
0.6 1.015 0.60 0.41 0.60 0.72 0.60 0.61
Baseline Mean 1756.61 1756.61 0.26 0.26 0.26 0.26 0.26 0.26
Effect over Baseline 27.9% 23.4% 12.5% 17.0% -22.7% -19.2% 1.6% 1.4%
Observations 5,387 5,387 116,275 116,275 116,342 116,342 1,473,291 1,473,291
Financial Non-Committed Committed Bordering

(B) Quadratic Support Donors Donors Municipalities
(1) (2) (3) (4) (5) (6) (7) (8)
762.63 334.51 0.087 0.047 -0.080 -0.071 0.007 -0.001

Estimate
(424.77) (309.52) (0.023) (0.020) (0.033) (0.017) (0.015) (0.008)
Robust p-value 0.041** 0.380 0.000*** 0.082* 0.333 0.002*** 0.630 0.991
Manual Optimal Manual Optimal Manual Optimal Manual Optimal
Bandwidth
0.60 1.203 0.60 0.73 0.60 0.98 0.60 1.28
Baseline Mean 1756.61 1756.61 0.26 0.26 0.26 0.26 0.26 0.26
Effect over Baseline 43.4% 19.1% 33.5% 18.4% -31.1% -27.7% 2.9% -0.4%
Observations 5,387 5,387 116,275 116,275 116,342 116,342 1,473,291 1,473,291
Notes: This table reports the estimated coefficients of the effect of campaign spending limits on labor market
outcomes of campaign contributors. I estimate the specification described in Equation 1, where odd columns
show the results considering a bandwidth of 0.6, while even columns consider the optimal choice of bandwidth
proposed by Calonico, Cattaneo and Titiunik (2014). Panel A shows the results considering a linear polynomial,
and panel B shows the results considering a quadratic polynomial. ***, ** and * represent 𝑝 < 0.01, 𝑝 < 0.05 and
𝑝 < 0.1, respectively.
Discretionary Appointments. As discussed in Section 2, I explore the character of the se-
lection process for public servants to examine the extent to which mayors influence the
distribution of jobs in local administration. In this approach, I split the sample of donors
between discretionally selected and nominated through formal examinations since, in prin-
25
ciple, we would expect mayors to affect only discretionary ones. Consistent with patronage
practices, Table 4 shows the estimated coefficients, in which I only find a positive and sta-
tistically significant effect (at the 1 percent level) for discretionary appointments (Columns
(1)-(2)). Additionally, the point estimates for positions selected via formal examinations are
fundamentally null (Columns (3)-(4)).

outcomes – Discretionary vs. Meritocratic Jobs
Appointment-Based Jobs Formal Examination

(A) Linear
(1) (2) (3) (4)
0.023 0.026 -0.001 -0.003

Estimate
(0.003) (0.002) (0.003) (0.003)
Robust p-value 0.000*** 0.000*** 0.214 0.825
Bandwidth
0.60 0.45 0.60 0.80
Baseline Mean 0.10 0.10 0.09 0.09
Effect over Baseline 22.4% 25.3% -0.2% -3.1%
Observations 238,674 238,674 238,674 238,674
Appointment-Based Jobs Formal Examination

(B) Quadratic
(1) (2) (3) (4)
0.050 0.027 -0.014 -0.001

Estimate
(0.004) (0.003) (0.011) (0.006)
Robust p-value 0.000*** 0.000*** 0.000*** 0.263
Bandwidth
0.60 0.70 0.60 0.87
Baseline Mean 0.10 0.10 0.09 0.09
Effect over Baseline 48.6% 25.9% -14.8% -0.9%
Observations 238,674 238,674 238,674 238,674
Notes: This table reports the estimated coefficients of the effect of cam-
paign spending limits on labor market outcomes of campaign contributors.
I estimate the specification described in Equation 1, where odd columns
show the results considering a bandwidth of 0.6, while even columns con-
sider the optimal choice of bandwidth proposed by Calonico, Cattaneo and
Titiunik (2014). Panel A shows the results considering a linear polynomial,
and panel B shows the results considering a quadratic polynomial. ***, **
and * represent 𝑝 < 0.01, 𝑝 < 0.05 and 𝑝 < 0.1, respectively.
6 Health Care Provision and Education Performance
The results discussed so far indicate that candidates use public employment as a bargaining
chip for political support from campaign donors when faced with spending caps. In addition,
the evidence presented in the previous section suggests that this result is consistent with
26
patronage practices. A natural question from a social point of view is the extent to which
discretionary appointments compromise the capacity of the local administration to provide
public services. Empirical evidence in this regard is lacking, and the few documented
assessments are ambiguous. Appointees can enhance the government’s performance since
employees may apply extra effort to maintain their positions as most allocated jobs do not
hold contractual stability (Khan, Khwaja and Olken, 2019), or boost work productivity by
integrating managerial abilities into the bureaucracy (Fenizia, 2022). In contrast, excessive
political patronage in Brazilian municipalities has a detrimental impact on long-term results,
such as fewer years of formal schooling and higher mortality rates (Barbosa and Ferreira,
2019).
I shed light on this discussion by taking advantage of the Brazilian institutional arrange-
ment, which defines the municipal power as responsible for the provision of health care
and primary education.21 In particular, I collect data on health (birth weight and mortality)
and education (performance outcomes) indicators from primary schools measured in 2020.
Notably, these outcomes are recognized as pertinent in terms of social welfare and quickly
responsive to public policies (Brollo, Kaufmann and La Ferrara, 2020; Carrillo and Feres,
2019).
Table 5 shows the estimated results considering health and education indicators. In
particular, the table presents the coefficients estimated using Equation 1, where Panel A uses
a linear polynomial and Panel B considers a quadratic specification. The dependent variables
in Columns (1)-(2) and (3)-(4) are defined as the ratio between the number of children born
weighing less than 1500g and 2500g, respectively; Columns (5)-(6) report the results for the
ratio between the number of fetal deaths and deaths of children under one year of age and
the total population of the municipality. Regarding education outcomes of primary schools,
Columns (7)-(12) refer to approval, fail, and dropout rates, respectively.
21 For a more in-depth discussion of the responsibilities of municipal governments, see Fujiwara
(2015) for health care and Akhtari, Moreira and Trucco (2022) for education.
27
Table 5: Effects of campaign spending limits on health care provision and education performance
Health Indicators Education Indicators

(A) Linear Birth Weight < 1500g Birth Weight < 2500g Infant Mortality Approval Rate Failure Rate Dropout Rate
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
0.650 0.667 4.428 4.614 5.906 6.986 -0.858 -0.851 0.468 0.485 0.389 0.346
Estimate
(0.192) (0.197) (1.267) (1.308) (5.721) (4.897) (0.454) (0.473) (0.162) (0.163) (0.424) (0.312)
Robust p-value 0.002*** 0.000*** 0.001*** 0.000*** 0.524 0.172 0.101 0.076* 0.013** 0.002*** 0.474 0.277
Manual Optimal Manual Optimal Manual Optimal Manual Optimal Manual Optimal Manual Optimal
Bandwidth
0.60 0.57 0.60 0.57 0.60 0.73 0.60 0.54 0.60 0.41 0.60 1.05
Baseline Mean 3.62 3.62 19.53 19.53 22.93 22.93 99.18 99.18 1.79 1.79 1.23 1.23
Effect over Baseline 18.0% 18.5% 22.7% 23.6% 25.8% 30.5% -0.9% -0.9% 26.1% 27.1% 31.7% 28.1%
Observations 5,564 5,564 5,564 5,564 5,560 5,560 5,540 5,540 5,540 5,540 5,540 5,540
28
Health Indicators Education Indicators

(B) Quadratic Birth Weight < 1500g Birth Weight < 2500g Infant Mortality Approval Rate Failure Rate Dropout Rate
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
0.728 0.649 5.350 4.227 5.231 6.478 -0.920 -1.059 0.556 0.558 0.364 0.463
Estimate
(0.232) (0.185) (1.539) (1.235) (8.222) (6.492) (0.561) (0.513) (0.225) (0.205) (0.508) (0.469)
Robust p-value 0.793 0.000*** 0.585 0.000*** 0.212 0.579 0.013** 0.038** 0.001*** 0.010** 0.183 0.349
Manual Optimal Manual Optimal Manual Optimal Manual Optimal Manual Optimal Manual Optimal
Bandwidth
0.60 1.36 0.60 1.28 0.60 1.06 0.60 0.94 0.60 0.81 0.60 0.98
Baseline Mean 3.62 3.62 19.53 19.53 22.93 22.93 99.18 99.18 1.79 1.79 1.23 1.23
Effect over Baseline 20.1% 18.0% 27.4% 21.6% 22.8% 28.2% -0.9% -1.1% 31.0% 31.1% 29.6% 37.6%
Observations 5,564 5,564 5,564 5,564 5,560 5,560 5,540 5,540 5,540 5,540 5,540 5,540
Notes: This table reports the estimated coefficients of the effect of campaign spending limits on health and education outcomes. I estimate the specification
described in Equation 1, where odd columns show the results considering a bandwidth of 0.6, while even columns consider the optimal choice of bandwidth
proposed by Calonico, Cattaneo and Titiunik (2014). Panel A shows the results considering a linear polynomial, and Panel B shows the results considering a
quadratic polynomial. ***, ** and * represent 𝑝 < 0.01, 𝑝 < 0.05 and 𝑝 < 0.1, respectively.
For birth weight outcomes, we observe a substantial increase in these indicators years
after the implementation of the electoral reform. Based on the baseline specifications (band-
width of 0.6 and linear polynomial), I estimate an increase of 18 percent and 22.7 percent
over the baseline mean for children born weighing less than 1500g and 2500g, respectively.22
Both coefficients are robust to the optimal bandwidth choice, quadratic specification, and
statistically significant at the 1 percent level. Although imprecise, the estimated coefficient
for infant mortality suggests an increase of roughly 23 percent over the baseline mean. The
worsening in health indicators is also followed by a deterioration in educational outcomes
due to patronage practices. Although the estimated effect for approval rate is essentially
zero, I find an increase over baseline of around 26 percent and 32 percent for failure and
school dropout rates, respectively. Consistent with the results for health outcomes, the coef-
ficients are robust to the optimal bandwidth choice, quadratic specification, and statistically
significant at the 1 percent level.
Nevertheless, one could argue that the negative results discussed above result from a
budget reduction experienced by the municipal administration. Consequently, the worsen-
ing in the provision of public goods would not be due to patronage practices but the result
of a reduced budget devoted to implementing and maintaining public policies. I show that
this is not the case by collecting data on health and education expenditures at the local level.
Table D.2 in the Appendix shows the estimated coefficients, in which I define the ratio of
health/education expenditures over the municipality’s total budget as dependent variables.
I do not find a significant reduction in these indicators, eliminating changes in the local
budget as a potential mechanism. Moreover, the decrease in students’ performance in pri-
mary schools may also be followed by a decline in students’ performance in state-managed
schools. On top of that, I test whether there is a negative effect on educational indicators for
secondary school students. Table D.3 in the Appendix presents the results for this sample of
schools, considering performance outcomes as dependent variables. Overall, I do not find
a meaningful negative impact for these students; the effect over the baseline mean is very
close to zero for the three outcomes examined.

22 See Table D.1 for descriptive statistics on health and education indicators.
29
7 Final Remarks
This paper studies the implementation of campaign spending regulations and, in particu-
lar, whether candidates respond to this financial constraint by distributing public office in
exchange for political support. To avoid the influence of confound factors and establish
causality, I take advantage of an electoral reform in Brazil that generated an exogenous
discontinuity concerning the maximum campaign spending allowed in the 2016 munici-
pal elections. Combining data from 80,000 campaign donors, coalition composition, and
individual-level administrative labor market records, I document a positive effect of roughly
2.3 percent on the likelihood of public sector employment (12 percent over the baseline mean)
immediately from the year after the elections. Earnings gains also accompany the increase
in the likelihood of employment.
The richness of labor market registries data on skill prerequisites to fulfill the positions,
recurrence of donations to the same political parties, and characteristics of the employment
contract allow me to investigate the mechanisms determining the results. First, I show that
allotted positions are concentrated only in technical-ranked jobs, making unfeasible a likely
attempt to make the local government more responsive to electoral promises. Second, the
likelihood of employment is positive only for campaign donors not ideologically connected to
the elected mayor, eliminating the possibility of behavior aimed at increasing the ideological
cohesion of the local administration. Third, I show that hiring is entirely determined by
discretionary appointments. Taken together, these results provide empirical evidence that
patronage is the channel behind the results, suggesting that public office is used exclusively
in exchange for political backing.
In the last part of the paper, I assess the extent to which patronage practices compromise
the capacity of local governments to provide public services for which they are responsible.
Collecting data on health care and primary education indicators, I estimate a substantial
deterioration in public services for both groups of outcomes. Additional results in public
spending focused on the implementation and maintenance of these public goods and school
performance of secondary schools (managed by the state) are not affected.
The results documented in this paper have important policy implications. First, this
paper discusses the selection process and recruitment of public officials. A vigorous con-
temporary debate in the Brazilian context focuses on the extent to which politicians can affect
30
the hiring of public servants without employing public tenders. Although a discretionary
influence has the potential to strengthen the bonds of trust between municipal officials and
bureaucrats, there is still no clear formal definition of how political affinities can replace
personal competence. Second, this paper provides pertinent evidence on the negative conse-
quences on social welfare due to patronage practices. Second, this paper provides pertinent
evidence on the negative consequences on social welfare as a result of patronage practices.
In the Brazilian context, much has been discussed about the limits to which politicians can
influence the composition of the public bureaucracy, potentially selecting individuals with
less competence than that demanded by the position.
31
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Article Type: Research Article

Section/Category: Political Theory

Corresponding Author: Caique Melo

Corresponding Author Secondary

Corresponding Author's Institution: Bocconi University: Universita Bocconi

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First Author: Caique Melo

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Online Appendix to "Why Don’t You Get a Job? Evidence

from Campaign Spending Limits"

For online publication only

A Appendix to Section 2 – Institutional Background 2

B Appendix to Section 3 – Empirical Analysis 9

C Appendix to Section 4 – Results 22

D Appendix to Section 6 – Health Care Provision and Education Performance 36

Figure A.1: Example of the use of public sector employment as an

Translation: Audifax is denounced for corruption schemes and allotment of appointments.

0 20 40 60 80 100 120 140 0 20 40 60 80 100 120 140

Yes 137 Yes 123

0 20 40 60 80 100 120 140 0 20 40 60 80 100 120 140

source of each variable.

79,567 campaign contributors.

employer-employee dataset, includes information on the total number of formal workers

data from municipal schools in the sample.

2010 Population Census provides several socioeconomic and demographic characteristics at

public sector for the period 2016:19.

nicipal characteristics made available by IBGE.

(A) Candidates’ Characteristics

a given municipality. Source: Tribunal Superior Eleitoral (TSE).

nicipality declared him/herself as being a female. Source: Tribunal Superior Eleitoral

municipality is in her/his second consecutive mandate as a mayor, thus facing term

limit as mayor. Source: Tribunal Superior Eleitoral (TSE).

Source: Tribunal Superior Eleitoral (TSE).

ipality is affiliated to the Partido do Movimento Democrático Brasileiro. Source: Tribunal

Superior Eleitoral (TSE).

(B) Labor Market Outcomes

belonging to the elected mayor’s coalition is registered in a public sector position in a

given year. Source: Relação Anual de Informações Sociais (RAIS).

Informações Sociais (RAIS).

employed in a professional/managerial position before the election. The classification

is made following ISCO-88. Source: Relação Anual de Informações Sociais (RAIS).

employed in a technical/supervisory position before the election. The classification is

made following ISCO-88. Source: Relação Anual de Informações Sociais (RAIS).

• Skill-Intensive Blue-Collar: Indicator variable that assumes value 1 if the candidate

following ISCO-88. Source: Relação Anual de Informações Sociais (RAIS).

is employed in the public sector in a bordering municipality to which the mayoral

candidate was elected. Source: Relação Anual de Informações Sociais (RAIS).

is employed in the public sector in a position through a discretionary appointment.

Source: Relação Anual de Informações Sociais (RAIS).

Anual de Informações Sociais (RAIS).

(C) Public Services

in 2020. Source: Datasus.

in 2020. Source: Datasus.

of children under one year of age in 2020. Source: Datasus.

nicipal schools in 2019. Source: Instituto Nacional de Estudos e Pesquisas Educacionais

Anísio Teixeira (INEP).

schools in 2019. Source: Instituto Nacional de Estudos e Pesquisas Educacionais Anísio

(D) Municipal Characteristics

ipality’s total population. Source: Instituto Brasileiro de Geografia e Estatística (IBGE).