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Working paper

Firms And Social Policy In The Post-Communist Bloc: Evidence From Russia

  When does business support the expansion of socialpolicy in the developing world? Existing work on managers preferences has tended to concentrate on the developed world, where governments can credibly commit  to  policy, tax evasion is constrained, and mechanisms exist  to hold  the bureaucracy  accountable for  policy  implementation. In  this paper, I relax these assumptions, arguing that weak  institutions  create opportunities  for some firms to shift costs onto others: making social policy more attractive.  I argue that firms with political connections are uniquely positioned to benefit from subsidies and property rights protection, which decreases the cost of social  policy, while firms  with low visibility can evade taxes and free-ride off universalistic social policy. I test this argument using a survey of 666 firms in 10 Russian regions.