Kinship pressure and firm-worker matching

Project report 30 Sep 2025 Firms and Trade

This report explores how social pressure from family members, rather than just informational constraints or contract issues, drives business owners in low- and middle-income countries to hire relatives, often at the expense of productivity. Through experiments in Zambia, it finds that when employers are given a socially acceptable excuse to hire outsiders, they do so more often, and that relatives tend to perform worse, highlighting the economic costs of family-based hiring.