Economics Research Seminar – Dr Paolo Pinotti

Title: Family Connections, Nepotism, and Political Bargaining

Date: Wednesday 04 March 2026

Time: 13:30 to 14:30

Venue: Online

https://teams.microsoft.com/meet/34220561044535?p=WQjhddOoeGfnBbBJpD

Meeting ID: 342 205 610 445 35

Passcode: xR2Lr9PB

Speaker:            Professor Paolo Pinotti

Paolo Pinotti Is Dean of Faculty, Professor of Economics at the Department of Social and Political Sciences, and Endowed Chair in the Economic analysis of Crime

Abstract:

This paper studies nepotism as both a form of favoritism and a tool for political bargaining. We focus on Brazilian municipalities, leveraging rich population data that link family ties, electoral candidates, and employment records. Using a regression discontinuity design based on close elections, we show that the relatives of narrowly elected mayors and councilors experience sizable labor market premiums. Relatives of mayors are 16 percent more likely to secure public employment relative to the control group mean, while relatives of councilors are 9 percent more likely. These effects are concentrated in public jobs, fade once the political term ends, and are strongest for less educated relatives, consistent with favoritism rather than improved screening. We then provide evidence that nepotism operates as a bargaining device: mayors appoint the relatives of councilors, including those in the opposition, with the effects strongest when the mayor lacks a majority in the municipal council. Exploiting a second regression discontinuity design at the municipality level, we show that the premium for opposition councilors’ relatives increases when the opposition narrowly secures an additional seat, reinforcing thenterpretation that appointments serve as political currency. Finally, we provide suggestive evidence that stricter regulation can help curb these nepotistic appointments.