State Employment as a Strategy of Autocratic Control in China

Format:Print
| Language:English
| Pages:87

Abstract

This paper presents evidence that autocrats use state-owned firms to strategically pacify social unrest via employment provision, a role that may contribute to their favorable treatment 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. I also find that direct transfers to male minorities rise when unrest threat is high, but primarily among the non-employed, revealing a complementary multi-pronged policy response. Furthermore, I find that employment increases after poor trade shocks and natural disasters, consistent with a general role in preventing unrest.