Who wins (and loses) from lobbying? Evidence from the Foreign Agents Registration Act

Abstract: 

This paper examines the benefits and costs of lobbying among three main groups---lobbyists' clients, legislators, and the people legislators represent. We do this by exploiting a unique feature of foreign lobbying in the United States: Lobbyists must report detailed accounts of their political activity on behalf of foreign clients. We combine the foreign government-lobbyist-legislator linkages these data provide---which are not present in domestic lobbying data---and several sources of exogenous variation in connections of lobbying clients and legislators to causally identify the impact of lobbying. Across multiple outcomes, we find that foreign countries and legislators benefit from lobbying. The people from more heavily lobbied congressional districts, however, do not, with greater lobbying intensity causally linked to lower district-level employment and gross domestic product growth. We then provide evidence that the negative effects for constituents are due to misallocation arising from special interest capture. Our results challenge the view that lobbyists mainly provide technical expertise for better policymaking and highlight that the benefits clients of lobbyists receive may come at the expense of voters.