  Connections appear to be helpful in many contexts, such as obtaining a job, a
promotion, a grant, a loan, or publishing a paper. This may be due either to
favoritism or to information conveyed by connections. Attempts at identifying
both effects have relied on measures of true quality, generally built from data
collected long after promotion. Building on earlier work on discrimination, we
propose a new method to identify favors and information from data collected at
the time of promotion. Under weak assumptions, we show that promotion decisions
for connected candidates look more random to the econometrician due to the
information channel. We derive new identification results and estimate the
strength of the two effects. We adapt the control function approach to address
the issue of the selection into connections. Applying our methodology to
academic promotions in Spain and Italy, as well as political advancements in
China, we find evidence that connections may both convey information and
attract favors.
