The Impact of Money in Politics on Labor and Capital : Evidence from Citizens United v. FEC

The perceived increase in corporate political influence has raised concerns that corporations advance policies that benefit capital and harm labor. We examine whether money in politics harms labor using the surprise Supreme Court ruling Citizens United v. FEC (2010), which rendered bans on political spending unconstitutional, affecting roughly half of US states (treated states). In a difference-in-difference analysis, we find that treated states see increased political turnover and, surprisingly, increased labor income. We show evidence that these effects are driven by increased political competition whereby money allows for more political entry from firms that could not exert political influence in other ways. On net, the economic environment becomes more business-friendly and some of these gains are passed on to workers