Personal Connections and Hiring Decisions in the Public Sector

Relying on comprehensive employment records of applicants in the universe of public jobs in Brazil from 1986 until 2017, an institutional reform that reduced discretion in hiring, and novel performance metrics for public administration, the paper presented in this Mannheim Applied Seminar provides the first evidence of how personal connections influence recruitment processes. The authors find that a reduction in the ability to leverage personal connections affects job seekers’ search effort, the type of jobs they target, as well as employers’ hiring decisions. Moreover, hires after the reform are of higher quality, have lower separation rates and absenteeism, and are more likely to be promoted. The authors also show that the decrease in connected hires improves the operational and budgetary efficiency of public sector establishments. These results carry significance in enhancing our understanding of how to bolster state capacity.