Serving the People or the People's Note: On the Political Economy of Talent Allocation

Abstract

An efficient allocation of talents through occupational choice is central to modern economic growth. Removing developmental barriers unfavorable to entrepreneurship and artificially imposed for political reasons (i.e., the cage theory) might be a plausible channel for China's superb economic performance. Using a newly compiled dataset on China's Super Rich Persons, the regression kink design reports supportive evidence on the politically induced structural change in the social composition of entrepreneurs using Deng Xiaoping's Southern Talks as an event shock. Consistent with a pro-market talent allocation framework, this article finds that (1) the share of super-rich entrepreneurs with state sector experience and a college degree declined, suggesting that the period of the Southern Talks opened a window of opportunity for venturing, and (2) the effects on the attributes of the parental father of the entrepreneurs are somewhat limited.