State Power Attracts Talent: Evidence From China’s Civil Servant Fever

Abstract

Why are government jobs so attractive to talented individuals in many non-democratic countries? We identify state power as a key factor. We analyze the impact of China’s recent value-added tax reform, an expansion of taxation power, on citizens’ preferences for tax administration positions, as revealed by participation in the National Civil Service Exam. Using a difference-in-differences approach that leverages pre-reform subnational variation in tax composition and a dataset of 166,012 government job openings from 2010 to 2021, we find that the reform attracted more and higher-ability individuals to tax-related state positions. The effect is particularly strong for positions involving greater regulatory power or those located in prefectures with higher graft opportunities. An original survey reveals that exam takers perceive increased power and benefits in tax agencies after the reform. Evidence from Chinese General Social Surveys suggests the talent drawn to the state likely comes from the private sector.

Keywords

non-democracy state power civil service exam tax reform VAT talent recruitment

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