The Nepotistic State: Familial and Political Ties to Elude Reforms in Brazil

• In Event: Clientelism and Corruption

Abstract

Rampant nepotism within government bureaucracies is frequently cited as a cause of poor governmental performance. Politicians may use influence over hiring to staff the government with unqualified relatives and, thus, degrade state performance. Given the putative negative effects of politician-linked nepotism, governments around the world have passed anti-nepotism laws that restrict this practice in various ways.

In this paper, we evaluate one such reform in Brazil using large-scale administrative data on the universe of local bureaucrats in the country. Specifically, we examine the consequences of a judicial decision to ban nepotism at all levels of government using a discontinuity design.

Our study documents several aspects of bureaucracy capture by local politicians: The empirical investigation presents many challenges, from developing a sound measure of nepotism hiring, to the devising of an identification strategy to overcome potential endogeneity threats. In the first step of the analysis, we measure politician-bureaucrat family ties to quantitatively analyze nepotism in the public sector. We use last name tokens to identify family links.

In the second step of the analysis, we measure the effect of winning on family member appointment adopting a regression discontinuity design on the margin of victory at the municipal level. The outcome variable of interest is the first difference in the log name matches. It emerges that elected mayors do appoint their relatives to bureaucratic positions. The estimates fall after the ban, suggesting that the ruling did reduce nepotism, though not eliminating the phenomenon completely.

In the third step of the analysis, we measure unintended consequences of the policy intervention. In particular, we address a basic criticism of the top-down intervention. We find some evidence of a strategic reaction to the nepotism ban. Before the court decision, we find no evidence of mayors in neighboring municipalities hiring elected candidates’ relatives; however, we do find evidence of this happening after the intervention.

Finally, we move away from within-party exchanges and look into within-ideological group exchanges of relatives. To assess whether a similar dynamic is at play, in a context of low party loyalty. This is done using a CF-Score ideal point assignment that relies on corporate and private donations towards local candidates.

In light of this evidence, we discuss the limits of top¬-down mandates for reforming local democratically elected governments, and the conditions under which reforms of this kind are best implemented.

Authors

• Michele Castiglioni, Bocconi University

• F. Daniel Hidalgo, Massachusetts Institute of Technology

• Gabriel Cepaluni, Sao Paulo State University