Xiaoming Zhang

This study exploits a special historical case-openings of treaty ports in 19th-century China to examine how upper-tail human capital, quantified via book creation, impacted modernization when facing external pressures. Employing a prefecture-level panel dataset from 1840 to 1904, the study establishes book density, indicative of knowledge endowment, as a significant and positive predictor of modern firm entry following the opening of treaty ports. To understand the mechanism, a critical aspect lies in understanding the Civil Service Examination (keju), an indigenous institution that historically dominated talent accumulation and allocation in China. By integrating data with keju, we find that exposure to Western influence mobilized the segment of upper-tail human capital at the bottom or outside of the keju system into entrepreneurship. This paper illustrates the dynamics between indigenous institutions and external pressures.

This study exploits a special historical case-openings of treaty ports in 19th-century China to examine how upper-tail human capital, quantified via book creation, impacted modernization when facing external pressures. Employing a prefecture-level panel dataset from 1840 to 1904, the study establishes book density, indicative of knowledge endowment, as a significant and positive predictor of modern firm entry following the opening of treaty ports. To understand the mechanism, a critical aspect lies in understanding the Civil Service Examination (keju), an indigenous institution that historically dominated talent accumulation and allocation in China. By integrating data with keju, we find that exposure to Western influence mobilized the segment of upper-tail human capital at the bottom or outside of the keju system into entrepreneurship. This paper illustrates the dynamics between indigenous institutions and external pressures.

Having credible information is crucial for improving politicians’ decision-making. Existing research suggests that expanding the range of information and access to firsthand sources can enhance decision quality. However, quantitative evidence regarding the effect of information control, particularly on bureaucracies, remains scarce. Our study investigates an information monitoring reform within the Qing China bureaucracy in 1722. This reform enabled local officials in designated positions to report directly and confidentially to the emperor, thereby streamlining information flow and strengthening monitoring capabilities. Using a generalized difference-in-differences design, we find that the introduction of the information monitoring system surprisingly undermined the efficiency of governmental disaster relief allocation. Specifically, prefectures with more direct reporting positions were more likely to receive disaster relief programs, even in the absence of severe disasters. This bias arose from information overload caused by an expanded but uneven information supply, making the emperor more susceptible to being swayed by dominant information flows due to limited attention. Additionally, we identify a corrective mechanism for the emperor’s misjudgment. The emperor placed greater weight on the reports of trusted officials who shared his ethnicity or were members of the ruling class, thereby mitigating the negative effects of information overload. This study contributes to improving the understanding of the unintended consequences of bureaucratic information control.