Essays in Economic History and Applied Microeconomics
Total Page:16
File Type:pdf, Size:1020Kb
Essays in Economic History and Applied Microeconomics Thesis by Yifei Huang In Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy CALIFORNIA INSTITUTE OF TECHNOLOGY Pasadena, California 2016 Defended May 5, 2016 ii c 2016 Yifei Huang ORCID: orcid.org/0000-0003-3500-1663 All Rights Reserved To my family iv ACKNOWLEDGEMENTS For me, the pursuit of Ph.D. is a long journey with dreams, adventures, chal- lenges and struggles. I would love to thank many people who helped me along the way. First, I am deeply indebted to my advisor, Jean-Laurent Rosenthal. Without his continuous mentoring, guidance and encouragement, the first two chapters of my thesis would not have been written. From him, I eventually learned how to do original research. It was an enlightening process for me. No words could fully express my gratitude to him. Second, I would love to thank my committee members: Matt Shum, Philip Hoffman, Erik Snowberg and Michael Ewens. They provided me with valuable feedbacks, suggestions and critiques. I also thank my college advisor, Xi Wu. Together with Matt and Xi, I wrote the third chapter of my thesis. I thank for their support, guidance and inspiration. Third, I have also received help from many other scholars. The UCLA-Caltech Chinese Economic History Workshop regularly organized by Bin Wong, Jean- Laurent, provided me with previous learning opportunities. Every meeting was an inspiring and pleasant experience. I thank Bin, Jean-Laurent, Richard Von Glahn, Maura Dykstra, Meng Zhang, Dong Yan, Sunkyu Lee, You Wang, and Xiang Chi for helpful feedbacks and suggestions. I also have benefited substantially from the Beijing Summer Workshop for Quantitative History initiated by Zhiwu Chen. I attended the inaugural summer school in 2013 and I had the honor to present my own research in 2015. I thank all instructors and organizers for the summer workshops. I thank Shiuon Chu, Yu Hao, Qin Jiang, Cong Liu, Ziyao Ma, Lemin Wu, Tianyang Xi, Meng Xue, Xun Yan, Lawrence Lok Cheung Zhang, and Jun Zhang for helpful discussions. I thank Cameron Campbell, Gregory Clark, Ben Gillen, Rod Kiewiet, James Kung, Lawrence Jin, James Lee, Debin Ma, Paul Rhode, Bob Sherman, Tuan-Hwee Sng, Patrick Wallis, Se Yan and Noam Yuchtman for their suggestions. I also thank my teachers and advisors in my predoctoral programs: Pierre-André Chiappori, Bernard Salanié and Paolo Siconolfi at Columbia, and Shuwei Liu at CUFE. In addition, I acknowledge the generous support from Beijing Erudition Digi- v tal Technology Research Center. I am honored to be the first recipient of their research fellowship, which granted me free access to their databases. I heav- ily relied on these databases to improve the accuracy in merging data from multiple sources. Lastly, I thank my family for their love and their unconditional support. This thesis is dedicated to them. vi ABSTRACT This thesis consists of three papers studying institutions that assess human capital and performance. The first two chapters study the Chinese Civil Service Examination in 19th century Jiangnan. Chapter 1 investigates how much intergenerational mobility did the exam system actually induce. Results show that although nominally every male was allowed to participate, in any given generation, effective compe- tition mostly took place among individuals with enough resources. Substantial advantages were enjoyed by families with established tradition of education in- vestment and exam success. Multigenerational analysis reveals a much higher level of elite persistence than what could be captured in analyzing only two adjacent generations. In Chapter 2, I track a sample of provincial graduates’ further progress in the national exams and their official career attainment about 20 years after they passed the provincial exam, with a focus on the role played by family background. I find that the competition in the national exam resembles a meritocratic competition when family background is measured only by the fa- ther’s status. However, when family background is measured by the highest status achieved by immediate paternal ancestors going back three generations, the family background remains significant in predicting national exam success, after controlling for proxy measures of competence. On official career attain- ment, I find that provincial graduates whose fathers held higher offices were significantly more likely to obtain higher offices themselves. Fathers’ office prominence were especially crucial for achieving positions beyond entry-level appointments. These results thus cast serious doubt on the thesis that the imperial civil service was meritocratic. Considering the historical and insti- tutional background, I suggest that nepotism and use of office purchase were likely to lie behind the importance of fathers’ office holding to provincial grad- uates’ career paths. Chapter 3 is a joint work with Matt Shum and Xi Wu. We examine strategic behavior in “360-degree” performance appraisal systems, in which an employee is evaluated by her supervisor, subordinate(s), peers (colleagues) and him- self/herself. Using proprietary data from a mid-sized Chinese accounting firm, vii we find that employees manipulate their ratings to peers: they grant better ratings to their less qualified peers while giving poorer ratings to their more qualified peers, compared with evaluations from employees who are not peers. In addition, this manipulation is mostly done by employees who themselves are less qualified. Altogether, this implies that more-qualified employees “lose” from the 360-degree evaluation scheme, and we show that their promotion chances would be (slightly) higher under the traditional “top-down” scheme in which their performance ratings is based only on the appraisal of their superi- ors. We discuss implications for improving a 360-degree performance appraisal system. viii TABLE OF CONTENTS Acknowledgements . iv Abstract . vi Table of Contents . viii List of Illustrations . x List of Tables . xii I Social Mobility and Meritocracy: Lessons from Chi- nese Imperial Civil Service Examination 1 Chapter I: Ladder of Success? Mobility in Chinese Imperial Civil Service Examination in 19th Century Jiangnan . 2 1.1 Introduction . 2 1.2 Historical Review . 5 1.2.1 Overview of Exam Structure under the Qing . 5 1.2.2 Examination Quota System . 6 1.2.3 Size of Each Type of Degree Holders . 7 1.2.4 Magnitude of Participation and Competition . 8 1.3 Data Description . 12 1.4 Estimating the Chance of Exam Success in the General Population 13 1.4.1 Method of Estimation . 13 1.4.2 Validity Check of the Estimation Method . 14 1.4.3 Probabilities of Passing the Provincial Examination . 15 1.4.4 Probabilities of Passing the Prefectural Examinations . 16 1.5 Analysis of the Sample of Provincial Graduates’ Paternal An- cestors . 17 1.5.1 Composition of Fathers’ Degree Status . 17 1.5.2 Intergenerational Mobility: Father-Son Transition Ma- trix of Degree Status . 19 1.5.3 Multigenerational Mobility: Grandfather-Father to Son Transition of Degree Status . 28 1.6 Conclusion . 34 Chapter II: Was the Chinese Imperial Civil Bureaucracy Meritocratic? Family Background, Exam Success, and Official Career Attainment in 19th Century Jiangnan . 37 2.1 Introduction . 37 2.2 Historical Review . 39 2.2.1 Overview of the Civil Service in Imperial Bureaucracy . 39 2.2.2 Bureaucratic Recruitment after Exam Success . 42 2.2.3 Overview of the Contribution System . 43 ix 2.2.4 Magnitude of the Use of Purchase . 45 2.3 Data Description . 47 2.4 Family Background and the Competition in National Exams . 49 2.4.1 Two Proxy Measures of Competence . 49 2.4.2 The Role of Family Resources in Exam Preparation . 53 2.4.3 Provincial Graduates’ Prefectural Level Degree Types . 55 2.4.4 Family Background and the Two Proxy Measures of Abil- ities . 57 2.4.5 Family Background and the National Exam Success . 66 2.5 Family Background and the Official Career Attainment . 73 2.6 Conclusion . 79 II A Study of Performance Appraisal in Modern Or- ganizations 81 Chapter III: Strategic Manipulation in Peer Performance Appraisal . 82 3.1 Introduction . 82 3.2 Related Literature . 84 3.3 Empirical Approach and Results . 85 3.3.1 Institutional Background . 85 3.3.2 Detecting Strategic Reporting . 87 3.3.3 Some Simple Evidence on the Existence of Strategic Be- havior . 88 3.3.4 Ratee Qualification and Strategic Rating . 88 3.3.5 Rater Qualification and Strategic Rating . 93 3.4 Ratings and Promotion Decisions . 95 3.5 Policy Implications: 360-degree Appraisal vs. Alternative Per- formance Rating Systems . 99 3.5.1 Correlations between Ratings from Department Heads, Peers, Nonpeers, and Self-evaluations . 100 3.5.2 Counterfactual Analysis of Promotion Outcomes . 101 3.6 Conclusions . 105 Appendix A: Appendix to Chapter 1 . 107 A.1 Licensing Examination in Changshu and Zhaowen Counties . 107 A.2 Robustness Check . 109 Appendix B: Appendix to Chapter 2 . 110 B.1 Additional Results . 110 B.2 The Sample Selection Issues of Examination Essays Collection Used by Jiang and Kung (2015) . 117 x LIST OF ILLUSTRATIONS Number Page 1.1 Composition of Fathers’ Degree Status over Time . 18 1.2 Composition of Fathers’ Degree and Office Holding over Time . 18 1.3 Illustration of the Data Structure . 20 1.4 Father-Son Transition Matrices of Degree Status . 22 1.5 Cumulative Distribution of Degree Status in Three Generations 22 1.6 Cumulative Distribution of Degree Status in Grandfather and Father Generations Conditional on Great Grandfather’s Degree Status . 25 1.7 Cumulative Distribution of Degree Status in Grandfather and Father Generations Conditional on Great Grandfather’s Degree Status . 30 2.1 Cumulative National Exam Pass Rate by Age Quartiles and by Provincial Ranking Quartiles . 52 2.2 Cumulative National Exam Pass Rate by Age and Provincial Ranking . 52 2.3 Cumulative National Exam Pass Rate by Ancestors’ Degree Status 72 2.4 Cumulative National Exam Pass Rate by Ancestors’ Office Holding 72 2.5 Predicted Probabilities of Official Career Attainment Conditional on Fathers’ Office Holding and National Exam Success .