The Human Capital Effects of Access to Elite Jobs

Abstract

We study the human capital effects of access to elite bureaucratic jobs in Taiwan, where performance on an examination determines entry into the civil service. Historically, quotas for successful applicants were set based on the 1948 populations of individuals’ native provinces in mainland China. This resulted in a higher probability of success on the exam—and, thus, greater access to elite positions—for descendants of certain migrant groups. These preferential quotas were replaced in 1962 with a uniform admissions policy. Using this variation, we find that the incentives created by preferential quotas increased human capital and improved long-run economic outcomes. (JEL D73, H83, J24, J45, M51)