Political connections shape the business models of lobbying firms

Lobbying firms seek access to policymaking by hiring individuals with connections to government officials and with previous experience as government employees. This paper examines a different avenue for access: the transition of a firm's lobbyists into government roles. We find firms frequently forge connections to government in this manner and their business benefits as a result. Using panel data from 2001 to 2020 of U.S. federal bureaucrats and congressional staff matched to lobbying records, we quantify the value to lobbying firms when their employees enter government service. We find lobbying firms that gain government connections through the departure of one of their lobbyists experience a 36% revenue increase, or roughly $320,000 per year. In examining what drives this increase in revenue, we find firms present connections as a premium service to existing clients and that connections to congressional offices are more valuable than those gained to executive branch agencies. These results shed light onto the business model of lobbying firms and the political economy of the lobbying industry. LINK