A Simple Model Of Nepotism
AbstractThis 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.
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Bibliographic InfoPaper provided by Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica) in its series Working Papers with number 201017.
Length: 19 pages
Date of creation: Oct 2010
Date of revision:
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Postal: Università della Calabria, Dipartimento di Economia, Statistica e Finanza, Ponte Pietro Bucci, Cubo 0/C, I-87036 Arcavacata di Rende, CS, Italy
Phone: +39 0984 492413
Fax: +39 0984 492421
Web page: http://www.unical.it/portale/strutture/dipartimenti_240/disesf/
More information through EDIRC
Recruitment policies; Favouritism; Nepotism; Connections; Incentives;
Find related papers by JEL classification:
- M51 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Firm Employment Decisions; Promotions
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-13 (All new papers)
- NEP-CTA-2010-11-13 (Contract Theory & Applications)
- NEP-LAB-2010-11-13 (Labour Economics)
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- Ponzo, Michela & Scoppa, Vincenzo, 2009.
"The Use of Informal Networks in Italy: Efficiency or Favoritism?,"
17281, University Library of Munich, Germany.
- Ponzo, Michela & Scoppa, Vincenzo, 2010. "The use of informal networks in Italy: Efficiency or favoritism?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 39(1), pages 89-99, January.
- Ponzo, Michela & Scoppa, Vincenzo, 2008. "The Use of Informal Networks in Italian Labor Markets: Efficiency or Favoritisms?," MPRA Paper 11764, University Library of Munich, Germany.
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