Mining for Favors: The Impact of Political Influence on Regulatory Enforcement

Abstract

Regulatory capture can generate significant social and economic costs, particularly
in dangerous occupations. In this article I evaluate whether political influence has
allowed firms to systematically evade safety and health regulations using data from one
of the country’s most dangerous occupations—mining. Using an instrument to capture
exogenous variation in political influence decisions, I show that when mining firms use
influence, they reduce their expected non-compliance costs by 30 percent, but report a
40 percent increase in death rates. Importantly, the largest benefit comes during the
adjudicative stage meant to be isolated from political influence.