Who Benefits from the Revolving Door? Evidence from Japan

A growing literature finds high returns to firms connected to legislative office. Less attention has been paid to benefits from bureaucratic connections and to organizations beyond for-profit firms. Using new data recording the first non-bureaucracy position occupied by all former civil servants in Japan, Professor Trevor Incerti first sheds light on the descriptive patterns of employment of former civil servants, showing that industries reliant on government contracts and highly regulated industries are overrepresented in hiring compared to the overall economy, and that nonprofit organizations (NPOs) hire roughly one-third of former bureaucrats. Next,  Incerti combines this revolving door data with new datasets of all government loans to private firms, stock prices, and all government contracts with NPOs in Japan to test for benefits that accrue to organizations that hire former bureaucrats. Using various differences-in-differences approaches, Incerti finds that (1) the volume of government loans increases in the years following a bureaucratic hire, (2) firms receive stock price boosts following high-ranking bureaucratic hires, and (3) the value of contracts negotiated between government agencies and NPOs are higher in years when former bureaucrats are on staff. These findings suggest that the practice of hiring former bureaucrats may represent a form of unofficial government assistance to politically-connected organizations.

Trevor Incerti is an Assistant Professor of Political Economy at the University of Amsterdam. His main area of research is in comparative political economy, and broadly examines economic drivers of political behavior. This includes topics such as money in politics, business-government relations, corruption, interest group influence, and collective action. Much of his work focuses on East Asia, particularly Japan. He also conducts research in quantitative methods, where he is particularly interested in the reliability and validity of measurement strategies. Trevor's research is published or forthcoming in the American Journal of Political Science, American Political Science Review, British Journal of Political Science, Journal of Politics, and Political Analysis, among other outlets, and has received coverage by media such as The Economist, The New Yorker, and The Washington Post. Trevor received his Ph.D. from Yale University (2022) and B.A. from UC Berkeley (2012), and was previously a Postdoctoral Fellow at the Weatherhead Center for International Affairs at Harvard University.

 

Organized by the Centre for the Study of Global Japan, University of Toronto.