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

Author

Listed:
  • Stefano Gagliarducci

    () (University of Tor Vergata and EIEF)

  • Marco Manacorda

    () (Queen Mary University of London, CEP (LSE) & CEPR)

Abstract

In this paper we investigate the effect of family connections to politicians on individuals' labor market outcomes. We combine data for Italy over almost three decades from longitudinal social security records on a random sample of around 1 million private sector employees with the universe of around 500,000 individuals ever holding political office, and we exploit information available in both datasets on a substring of each individual's last name and municipality of birth in order to identify family ties. Using a diff-in-diff analysis that follows individuals as their family members enter and leave office, and correcting for the measurement error induced by our fuzzy matching method, we estimate that the monetary return to having a politician in the family is around 3.5 percent worth of private sector earnings and that each politician is able to extract rents for his family worth between one fourth and one full private sector job per year. The effect of nepotism is long lasting, extending well beyond the period in office. Consistent with the view that this is a technology of rent appropriation on the part of politicians, the effect increases with politicians' clout and with the resources available in the administration where they serve.

Suggested Citation

  • Stefano Gagliarducci & Marco Manacorda, 2016. "Politics in the Family. Nepotism and the Hiring Decisions of Italian Firms," Working Papers 786, Queen Mary University of London, School of Economics and Finance.
  • Handle: RePEc:qmw:qmwecw:wp786
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    References listed on IDEAS

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    1. repec:cup:jechis:v:78:y:2018:i:01:p:1-39_00 is not listed on IDEAS
    2. Maurer, Stephan E., 2018. "Voting Behavior and Public Employment in Nazi Germany," The Journal of Economic History, Cambridge University Press, vol. 78(01), pages 1-39, March.
    3. Emanuela Ghignoni, 2016. "The ‘great escape’ from Italian Universities: Do labour market recruitment channels matter?," QUADERNI DI ECONOMIA DEL LAVORO, FrancoAngeli Editore, vol. 2016(106), pages 49-75.
    4. Benjamin Monnery, 2017. "Collaborateurs, emplois familiaux et niveau d'activité des parlementaires français," Working Papers halshs-01538005, HAL.

    More about this item

    Keywords

    Nepotism; Family connections; Politics; Rent appropriation;

    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
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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