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Princelings in the Private Sector: The Value of Nepotism

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  • Szakonyi, David

Abstract

What is the value of a family tie? Nepotism is a common feature of democratic and non-democratic systems, but our understanding of how and why family members of government officials receive preferential treatment is limited. Using administrative data on the universe of Moscow citizens to identify family links, I adopt a difference-in-differences design to estimate the labor market returns of having a relative enter the Russian government from 1999 to 2004. Employment rates and annual wages increase for individuals related to federal bureaucrats. Surprisingly, these relatives just as often find work in the private sector, over which the government has no formal control. To explain this, I demonstrate that companies strategically hire officials' family members in order to receive state contracts and preferential regulatory treatment. Governments may be willing to overlook this type of favoritism in the allocation of jobs, since even if they do not benefit directly, nepotism creates a class of individuals invested in the current power structure.

Suggested Citation

  • Szakonyi, David, 2019. "Princelings in the Private Sector: The Value of Nepotism," Quarterly Journal of Political Science, now publishers, vol. 14(4), pages 349-381, October.
    • Handle: RePEc:now:jlqjps:100.00018087
    DOI: 10.1561/100.00018087
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    Cited by:

    1. Jean Francky Landry Ngono, 2023. "Corrupting Politicians to Get Out of Unemployment: Empirical Evidence from Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1004-1032, June.
    2. 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.
    3. Duvanova, Dinissa & Nikolsko-Rzhevskyy, Alex & Zadorozhna, Olha, 2023. "Can Black Tulips stop Russia again?," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1274-1288.

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