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The Limits of Meritocracy: Screening Bureaucrats Under Imperfect Verifiability

Juan Carlos Suárez Serrato, Xiao Yu Wang, Shuang Zhang

NBER Working Paper No. 21963
Issued in February 2016, Revised in May 2017
NBER Program(s):Development Economics, Labor Studies, Public Economics, Political Economy

Meritocracies that aim to identify high-ability bureaucrats are less effective when performance is imperfectly observed. First, we show meritocratic governments forgo output maximization when they design incentives that screen for ability. This trade-off has empirical implications that reveal whether governments prioritize screening. We show Chinese governments used the One Child Policy to screen mayors, implying a meritocratic objective. Second, we show misreporting limits bureaucratic screening. Using a non-manipulated measure of performance, we show mayors misreported performance metrics, and that promoted mayors were not of higher ability. We thus challenge the notion that meritocratic promotions were effective substitutes for democratic institutions.

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Document Object Identifier (DOI): 10.3386/w21963

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