Bio

Yameng Fan is an Assistant Professor of Finance at the Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University. She received her Ph.D. in Economics from Universitat Pompeu Fabra in Spain in 2024 and was an Assistant Professor of Economics at ENSAI-CREST, France from 2024 to 2025. Her research primarily focuses on macro-labor economics, political economy, and corporate finance. Her research centers on the macro implications of market power and firm organization structures on social welfare, income inequality, and total factor productivity.

Abstract

This paper examines how corporate political connections affect firm-level markups through a quasi-exogenous shock: the involuntary removal of U.S. House of Representatives members (“committee exile”). We find that 10% more long-term political connections increased markups by 0.47 percentage point among U.S. public firms, while short-term connections exhibited no significant effects. We develop a general equilibrium model where firms build up political connections for regulatory burden avoidance. Counterfactual analysis suggests that the mass exiles at the end of 2010 accounted for 11.2% of the rise of markups post 2010.