Aw aren’t babies so adorable? Don’t you just want to give them the world? Perhaps, even the entire economy!“Nepo Babies” became two little popular phrases on the internet, referring to the offspring of a famous person who follows their parents career, who has likely benefited from their parents’ fame or connections and gains success despite a competition (Vulture, 2022)
Corruption and nepotism are two sides of the same coin. While many see corruption as the bigger issue, the truth is nepotism can be just as damaging to the economy alone. A scientist at Harvard’s economic mobility research, Matthew Staiger found that nepotism and social connections have an astonishing impact on economic mobility. These Nepo Babies earn almost 20 percent more than other regular babies (Harvard Magazine, 2023). Talented or not, the undeniable head start Nepo Babies receive – access to connections, training, and opportunities is trickery and unfair. Approximately, at 30 years old, 28% of American sons and 17% of daughters work for their fathers' company full-time, resulted a huge miss for the remaining of labor market to make their shot—some lucky girl, huh?
According to Staiger's latest research, nepotism perpetuates economic inequality by maintaining the wealthy at the top of the social ladder while making it difficult for the poor to earn a living. Staiger explores how nepotistic hiring might shift the landscape of the entire labor market. Will the poor sustain work ethic and high productivity, even if it means losing to a Nepo baby? Frankly, it’s not that difficult to spot and analyze these babies glaring in their most favored industries such as: Entertainment, Politics, and Business.
That Baby Stole my Audition!
Hollywood loves puting Nepo Babies on the pedestal. Hollywood is rife with nepotism, making it incredibly difficult to become a star based solely on talent, training, and perseverance. While luck might play a role, a 2019 Guardian article revealed a shocking truth: only 2% make it on their own– and the term "self-made" barely applies. (The Guardian, 2019). Look around! Kendall Jenner and Bella Hadid, two Nepo Babies, make up half of the highest-paid models. Unlike most workplaces, where you might be "someone's kid," here, everyone here seemed to have daddy’s last names.
Turns out journalist loves bashing these Hollywood's "Nepo Babies", presented through a Vulture article, "She Has Her Mother's Eyes, and Agent". Noticed by the faces of these Nepo babies, actresses Maude Apatow and Zoe Kravitz expressed insecurity, and sympathized with Hailey Bieber, highlighting the constant criticism of labelling as "Nepo Babies”.
Lily-Rose Depp, a teenage actress and model, landed a coveted Chanel ambassadorship at just 16, following in her mother's footsteps. This sparked criticism, “She could not have walked in Chanel at 5 '3 if her dad wasn’t Johnny Depp”, and there were millions of 6' 2 models out there who were more deserving (Backstage, 2024). Lily-Rose, however, defended herself in Elle magazine, dismissing the criticism as nonsense. She compared her achievement to a doctor who earned their position through hard work, suggesting her own path was equally valid (Yikes!)
This baby behavior can be explained through Behavioral Economics as known as the biases in decision making, the Anchoring Effect (FED of St.Louis, 2021). The anchoring effect is a cognitive bias in which people depend strongly on the first piece of information they encounter while making decisions. This initial knowledge, known as the "anchor," serves as a reference point for their later judgment and decision. Even if the anchor is arbitrary or unrelated to the decision at hand, it might distort people's views and lead to poor choices— Just like Hollywood praising the “Depp” in Lily Rose’s.
Could the effect of daddy’s last name resort to selection of elites in the Labor Force? Worse, the prevalence of nepotism within specific industries is proven to exacerbate structural unemployment (Peoplespheres, 2023). When positions are filled based on familial connections rather than skills alignment, qualified individuals are left unemployed. This creates a skills mismatch within the labor market, hindering the efficient allocation of resources and contributing to a situation where there are unfilled vacancies alongside a pool of qualified but jobless individuals. In result, these Nepo Babies are taking up the quotas of demand for labor.
Structural unemployment arises from a fundamental imbalance within a particular labor market. This imbalance is characterized by a demand shortage, where the number of available jobs is insufficient to employ all willing workers. This deficiency can be attributed to wage rigidities, where wages remain above the equilibrium level for that specific market. In simpler terms, wages may be artificially high in a certain industry, leading to a surplus of labor relative to available positions. This may lead to discouraging skill development and discouraged workers – where they believe that they are unable to compete with the Labor market, as these Nepo Babies will keep on cheating their way for an employment status. (Mankiw, 2015)
