State Capacity Building and Bureaucratic Recruitment: Evidence from China

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Abstract

This paper demonstrates that state capacity building can significantly impact bureaucratic recruitment. Using a dataset of 166,012 government job openings in the the National Civil Servant Examination (2010 - 2021), we find that China’s value-added tax reform attracted more and higher-ability individuals to the tax agency. The effect is particularly pronounced for positions associated with increased regulatory power or greater corruption opportunities following the reform. An online survey indicates that exam takers perceive the reform as enhancing the power and benefits of the tax agency. Evidence from the Chinese General Social Surveys suggests that the talent attracted to government positions post-reform likely come from the private sector.