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A simple model of favouritism in recruitment

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  • Ponzo, Michela
  • Scoppa, Vincenzo

Abstract

This paper analyses theoretically favouritism in recruitment decisions. We study the investments in connections by applicants for jobs which pay a wage rent and the behaviour of public or private managers intending to favour the recruitment of connected agents in place of more competent candidates. Key elements in determining favouritism are the delegation of recruitment decisions and unverifiable information regarding the skills of job applicants. We show in an agency framework that if the manager is "corruptible", both low and high ability workers invest in connections and that nepotism is more widespread in jobs paying high wage-rents; in organisations in which "low-powered incentives" are used for managers; when firm performance is slightly sensitive to abilities; when it is easy to make hidden payments and the intensity of family ties is strong; when the uncertainty of connection process is low.

Suggested Citation

  • Ponzo, Michela & Scoppa, Vincenzo, 2011. "A simple model of favouritism in recruitment," Research in Economics, Elsevier, vol. 65(2), pages 78-88, June.
    • Handle: RePEc:eee:reecon:v:65:y:2011:i:2:p:78-88
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    3. Jolita Vveinhardt & Włodzimierz Sroka, 2020. "Nepotism and Favouritism in Polish and Lithuanian Organizations: The Context of Organisational Microclimate," Sustainability, MDPI, vol. 12(4), pages 1-23, February.
    4. Duran Miguel A. & Morales Antonio J., 2014. "The Rise and Spread of Favoritism Practices," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 397-414, January.
    5. Aina, Carmen & Nicoletti, Cheti, 2018. "The intergenerational transmission of liberal professions," Labour Economics, Elsevier, vol. 51(C), pages 108-120.
    6. Olivera Marjanovic & Vijaya Murthy, 2022. "The Emerging Liquid IT Workforce: Theorizing Their Personal Competitive Advantage," Information Systems Frontiers, Springer, vol. 24(6), pages 1775-1793, December.
    7. Nicoletti, Cheti & Aina, Carmen, 2014. "The intergenerational mobility of liberal professions: nepotism versus abilities," ISER Working Paper Series 2014-39, Institute for Social and Economic Research.

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