Discussion paper

DP11277 Politics in the Family Nepotism and the Hiring Decisions of Italian Firms

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.


Manacorda, M and S Gagliarducci (2016), ‘DP11277 Politics in the Family Nepotism and the Hiring Decisions of Italian Firms‘, CEPR Discussion Paper No. 11277. CEPR Press, Paris & London. https://cepr.org/publications/dp11277