Corruption in Peru : evidence from nepotism in congress

Abstract

Studies of nepotism in public office tend to focus on its prevalence within politicians’ immediate area of influence—specifically how politicians employ their power to hire individuals within the bureaucracy they oversee directly. Using a large database from Peru of all public employees between 2013 and 2022 across all branches of government, as well as electoral data from 2016, I employ an intra-party regression discontinuity (RD) design to identify the effect of an electoral victory on hiring relatives to public positions within the country’s entire bureaucracy. I first examine the effects of congressional victory on nepotism in the legislative bureaucracy. I find that, compared to non-elected candidates of the same party and electoral district, individuals who barely won their congressional elections hire more employees that share their last names and allocate a larger sum of money to their contracts. I then analyze the effects of winning office on the hiring of potential relatives in other branches of government. I document a positive effect of congressional victories on these hirings in regional governments—over which members of Peru’s Congress exercise a sizable influence—but find no effect within the Executive or the Judiciary. These results underscore the impact of nepotism beyond a politician’s direct area of influence and suggest previous studies underestimate its prevalence.