Reforming the Nepotistic State? The Direct and Indirect Effects of Anti-Nepotism Bans
50 Pages Posted: 27 Apr 2022 Last revised: 1 Jun 2022
Date Written: March 30, 2022
Abstract
Hiring relatives in the bureaucracy – a practice known as nepotism – increases politicians’ institutional control at the expense of trust and perceived fairness. Governments worldwide have passed anti-nepotism laws, but their effectiveness is not well established. Using the universe of public employees’ contracts (50 million over 11 years), I assess the direct and indirect effects of such reform in Brazil. Empirically, I use a Regression Discontinuity design to show that winning local elections translates into an additional 3.7 hires per thousand (3 times the sample mean). Combining non-parametric tests and a Difference-in-Differences design, I show that the ban reduces additional hires by 1.2 units within municipalities, though increasing them by 0.8 across municipalities, a spillover effect stemming from the strategic displacement of discretionary hiring. This paper contributes to the scholarship on the political capture of bureaucracies, developing a measure of nepotism, and assessing bans’ effectiveness in curbing the phenomenon.
Keywords: Nepotism, Bureaucratic Reform, Corruption Displacement
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