BENEFITS TO RELATIVES OF TOP POLITICIANS: Evidence from Swedish local politics

Voters understandably prefer their political leaders not to make use of their hold on power to siphon off public resources to their children or siblings. New research by Olle Folke, Torsten Persson and Johanna Rickne shows that at least in local Swedish politics, such behaviour – ''dynastic political rent-seeking'' – is largely absent.

But the findings of their study, which is published in the October 2017 issue of the Economic Journal, contrast starkly with work on political nepotism in other countries, notably Italy and the Philippines. They also contrast with anecdotal evidence about Sweden, according to which children of politicians are favoured for public sector jobs and more distant family members benefit from lucrative contracts in public procurement.

The researchers'' analysis makes clear why there is a gap between perceptions and reality in Swedish local politics. It turns out that the children of politicians who win mayoral elections are more likely to take a job at home than go off to university, which means that they earn more money than their college-bound contemporaries whose parents are less politically successful.

The researchers compare post-election incomes for family members related to politicians that win or lose elections by a close enough margin that the result resembles a lottery. Family membership links are perfectly observed via mandatory identification codes in Swedish registers; and yearly incomes from different sources (both jobs and businesses) are observed via tax and income registers.

This empirical strategy and these data make it possible to estimate, reliably and precisely, how the electoral success of local politicians influences the incomes of their relatives. The focus is on the appointments of mayors, who wield large influence in Swedish municipalities.

The researchers'' comparison of incomes of the siblings of winning or losing candidates for mayor shows no differences.

For children, however, the results show a huge disparity in favour of children to close election winners. Children of winning mayoral candidates have, on average, incomes about 20% higher than children of losing mayoral candidates.

Naïve analysis could interpret this finding as the result of substantial nepotism. But analysing the results in more detail, the study finds that the data do not warrant this harsh interpretation.

Children of winning mayors do not earn more due to a greater likelihood of holding public sector jobs. Nor do they earn extra income in the previous occupation or employment sector of their politically successful parent.

Rather, parents'' political success is associated with children''s educational decisions: the children of winning politicians are more likely to remain in their parent''s municipality, rather than enter university. Staying home and taking a job means that they earn more money than the children of losing politicians who go off to university.

The authors conclude:

''Our results raise a warning flag for research on political nepotism.''

''A simple income comparison does not reveal foul play, unless the sources of income can be uncovered.''

''Naïve analyses risk unduly judging politicians as nepotistic and undercutting our trust in political institutions.''

Dynastic Political Rents: Economic Benefits to Relatives of Top Politicians'' by Olle Folke, Torsten Persson and Johanna Rickne is published in the October 2017 issue of the Economic Journal. Olle Folke is at Uppsala University. Torsten Persson is at Stockholm University. Johanna Rickne is at the Research Institute for Industrial Economics.