Discretion, Talent Allocation, and Governance Performance: Evidence from China’s Imperial Bureaucracy

Abstract

A long intellectual tradition starting with Max Weber views an ideal bureaucracy as a completely rule-based system. However, the net effect of discretionary appointment compared with a rule-based approach is theoretically ambiguous. Exploiting a unique setting in China’s imperial bureaucracy, where a personnel reform shifted the appointment method for prefecture governors from the lottery rule to a discretionary system, we show that discretionary appointment improved the quality of governors and led to an increase in public goods provision and a reduction in social unrest. The positive effects are more pronounced when the appointers had a larger stake in the organization.