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Discretion, talent allocation, and governance performance: Evidence from China’s imperial bureaucracy

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  • Liu, Kevin Zhengcheng
  • Zhang, Xiaoming

Abstract

Public organizations are often characterized by rigid rules and procedures. Can discretion in personnel decisions improve governance performance? This paper investigates how discretion in internal appointments affects the functioning of public organizations. We study an organizational reform in China’s imperial bureaucracy that modified the appointments of certain governorships from a rule-based process to a more discretionary method. We find that discretionary appointments improved public goods provision and led to greater state responsiveness. We provide evidence consistent with better selection: (1) discretion increased observable officer quality measured by experiences and civil exam qualifications; (2) exploiting the quasi-random rotations of governors to prefectures, we show that governors having previously been selected by discretion performed better. Evidence also suggests that the incentive effect is another mechanism. Finally, we provide evidence suggesting that the benefit of discretion depends on the incentive alignment of decision-makers with the organization.

Suggested Citation

  • Liu, Kevin Zhengcheng & Zhang, Xiaoming, 2025. "Discretion, talent allocation, and governance performance: Evidence from China’s imperial bureaucracy," Journal of Development Economics, Elsevier, vol. 172(C).
    • Handle: RePEc:eee:deveco:v:172:y:2025:i:c:s0304387824001408
    DOI: 10.1016/j.jdeveco.2024.103391
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    More about this item

    Keywords

    Discretion; Bureaucracy; Public goods; Personnel economics; Selection;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H4 - Public Economics - - Publicly Provided Goods
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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