A SIMPLE MODEL OF NEPOTISM

Michela Ponzo and Vincenzo Scoppa ()

No 201017, Working Papers from Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF

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.

Keywords: Recruitment policies; Favouritism; Nepotism; Connections; Incentives (search for similar items in EconPapers)
JEL-codes: D73 J24 J31 J71 M51 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2010-10
New Economics Papers: this item is included in nep-cta and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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