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DP11650 | Crony Capitalism and the Targeting of Violence: Labor Repression During Argentina's Last Dictatorship

Publication Date

11/20/2016

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Abstract

Well-known dictatorships have justified massive human rights violations on the grounds that they were aimed at attacking crony capitalism (governance based on favoring firms that are connected to the regime). So far, however, there is no systematic study examining whether this justification should be believed. We address this gap in the literature in the context of one of the best-known episodes of human rights violations in modern history, the repression following the coup in Argentina on March 24, 1976. Specifically, we examine the logic driving the choice of firm level union representatives who were subjected to violence following the coup. Using an original dataset assembled and digitized by us, we find that political, business and social connections to the regime are associated with an increase of 2 to 3 times in the number of firm level union representatives arrested and/or disappeared. This is the case even after controlling for a battery of firms’ characteristics that capture alternative explanations for the targeting of violence. The effect is particularly pronounced in privately owned (as opposed to state-owned) firms, suggesting that the correlation is driven by cronyism for financial gain rather than ideology or information transmission. We also show that connected firms benefited from violence against union representatives by subsequently having less strikes and a higher market valuation. Our findings highlight the pervasiveness of ties to the government, even in cases where one of the main stated goals of the regime is to curb cronyism.