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Nepotism, Schooling Outcomes and Economic Development

Marcello Perez-Alvarez and Holger Strulik ()

No 2018-02, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Schooling outcomes matter for economic development. At the same time, educational policies around the globe often fail to effectively improve them. This paper suggests perceived nepotism as an important barrier to the development of cognitive skills as schooling outcomes. We argue that students in countries that perceive labor markets to be nepotistic experience a weaker economic motive to invest in human capital. To formally motivate this relationship, we develop a dynamic general equilibrium model in which nepotism is explained as an evolving cultural norm. We test the central prediction of the model by relating the PISA scores to an indicator for perceived nepotism at the country level. The findings show that, on average, an increase in one standard deviation of the perceived nepotism indicator decreases the PISA reading scores by 0.21 standard deviations, conditioning for overall corruption perception. Several robustness checks corroborate the stability of our estimate. The analysis implies that recruitment practices in labor markets strongly shape individual's efforts to accumulate human capital. Accordingly, the consideration thereof may enhance educational policy efforts.

Keywords: nepotism; cognitive skills; human capital; economic growth; norm transmission (search for similar items in EconPapers)
JEL-codes: E24 I21 I25 O10 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu, nep-gro and nep-mac
Date: 2018
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