Abstract
We study how individual political views shape firm behavior and labor market outcomes. Using new micro-data on the political affiliation of business owners and private-sector workers in Brazil over the 2002–2019 period, we first document the presence of political assortative matching: business owners are significantly more likely to employ copartisan workers. Political assortative matching (which has been rising over time) is larger in magnitude than assortative matching along gender and racial lines (which have been decreasing over time). We then provide three sets of results consistent with the presence of employers’ political discrimination. First, we conduct an incentivized resume rating field experiment showing that owners have a direct preference for copartisan workers opposed to workers from a different party. Second, several patterns in the micro-data and an event study are consistent with a discrimination channel. Third, we conduct representative large-scale surveys of owners and workers revealing that labor market participants view employers’ discrimination as an important explanation behind our findings. We conclude by presenting evidence suggesting that political discrimination in the workplace has additional real implications: copartisan workers are paid more and are promoted faster within the firm, despite being less qualified; firms displaying stronger degrees of political assortative matching grow less than comparable firms.