Description:
Revolving doors is central in contemporary US politics. We know that companies hire revolving doors lobbyists to get access to the government thanks to their contacts, but we still do not know under which conditions companies need that access. This paper argues that companies hire revolving doors lobbyists to avoid adjustment costs from trade. We provide evidence for this argument by testing the effect of Chinese imports in the US on the likelihood of US companies to hire revolving door lobbyists. We do so with company-level panel data and by instrumenting the potential trade adjustment costs of a company with the Bartik instrument for Chinese imports interacted with the company’s investment in specific assets. We find that companies are more likely to hire revolving doors lobbyists where they face higher adjustment costs. These effects are stronger for lobbyists working on trade-related issues and when companies emphasise more political risk from trade