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Politics in the Family: Nepotism and the Hiring Decisions of Italian Firms

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  • Stefano Gagliarducci
  • Marco Manacorda

Abstract

This paper studies the effect of family connections to politicians on individuals' labor market outcomes. Using data for Italy spanning more than three decades on a sample of almost one million individuals plus data on the universe of individuals holding political office, we show that politicians extract significant rents, in terms of private sector jobs, for their family members. We present evidence consistent with the hypothesis that this phenomenon is a form of corruption, i.e., a quid pro quo exchange between firms and politicians, although arguably an inferior substitute for easier-to-detect modes of rent appropriation on the part of politicians.

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  • Stefano Gagliarducci & Marco Manacorda, 2020. "Politics in the Family: Nepotism and the Hiring Decisions of Italian Firms," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 67-95, April.
    • Handle: RePEc:aea:aejapp:v:12:y:2020:i:2:p:67-95
    DOI: 10.1257/app.20170778
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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