Bureaucratic Nepotism

Abstract: This paper studies how bureaucratic nepotism works in developing countries. By linking confidential information on bureaucrat's family ties and administrative employer-employee records on the universe of civil servants in Colombia (2011-2017), I document how family connections within the public administration distort the process of hiring, promotion, and compensation of civil servants. I provide evidence on the pervasiveness of close family ties and how they are negatively related to the performance of bureaucrats and governmental agencies. As oppose to the literature on political patronage, I emphasize the role of family connections to top non-elected bureaucrats in shaping public employment outcomes. I evaluate the anti-nepotism legislation introduced in 2015 and its impact on the nepotistic returns to family connections. I find evidence on the limited effectiveness of the reform and highlight the mechanisms through which bureaucrats were able to bypass the reform substituting different margins of favouritism and reshuffling within the public administration.