STEG Working Paper Series

State Employment as a Strategy of Autocratic Control in China

Jaya Y. Wen

StateEmploymentAsAStrategyOfAutocraticControlInChina.jpeg

This paper presents new evidence that autocrats use state-owned enterprises to pacify social unrest via employment provision, which may reinforce state firms’ low productivity and persistence across settings. I use variation in a regional conflict between Uyghur separatists and the Chinese government to establish that, in years and counties with a higher threat of unrest, state-owned firms hire more male minorities, the demographic most likely to participate in ethnic conflict. Concurrently, wages rise and private employment falls among this group. These patterns are consistent with a theoretical framework of government-subsidized, pacification-motivated state employment, and a quantification exercise indicates that state firms implicitly receive a 26% subsidy on male minority wages. Furthermore, I find that state employment increases after poor trade shocks and natural disasters, consistent with a general role in preventing unrest.

Related content

STEG Working Paper Series

Worker Mobility in Production Networks

Marvin Cardoza, Francesco Grigoli, Nicola Pierri, Cian Ruane • Research Theme 1: Firms, Frictions and Spillovers, and Industrial Policy
STEG Working Paper Series

The Great Upgrade

Alexandros Ragoussis, Jonathan Timmis • Research Theme 1: Firms, Frictions and Spillovers, and Industrial Policy
STEG Working Paper Series

Occupational Inheritance in Africa

Nicolas Syrichas • Research Theme 2: Labour, Home Production, and Structural Transformation at the Level of the Household
STEG Working Paper Series

Spatial Production Networks

Costas Arkolakis, Federico Huneeus, Yuhei Miyauchi • Research Theme 1: Firms, Frictions and Spillovers, and Industrial Policy