Guo Xu

[Previous versions were circulated under the title "Determinants and Consequences of Bureaucratic Effectiveness: Evidence from the Indian Administrative Service" and "The Costs of Bureaucratic Rigidity: Evidence from the Indian Administrative Service"]

Bureaucracies are configured differently to private sector and political organizations. Entry is competitive, promotion is based on seniority, jobs are often for life and retirement occurs at a fixed age. This implies that older entering officers, who are less likely to attain the glittering prize of reaching the top of the bureaucracy before they retire, may be less motivated and exert less effort. Using a nationwide stakeholder survey and rich administrative data on elite civil servants in India we provide evidence that: (i) officers who cannot reach the senior-most positions before they retire are perceived to be less effective and are more likely to be suspended, (ii) this effect is weakened by a reform that extends the retirement age and (iii) states that contain a higher proportion of career capped officers perform less well but this effect is weakened by the pension reform. Together these results suggest that the career incentive of reaching the top of a public organization is a powerful determinant of bureaucrat performance.

We combine historical personnel data from the British colonial administration with modern public finance data to study the impact of colonial governors on fiscal capacity. Exploiting rule-based variation in the allocation of governors connected to their superior at time of appointment, we find that modern day countries exposed to more patronage governors exhibit lower fiscal capacity today. These negative effects are persistent over time and driven by indirect taxes which patronage governors disproportionately affected in the colonial period. The results thus provide evidence for a public finance channel through which the effects of patronage appointments extend beyond decolonization.

I study how patronage affects the promotion and performance of senior bureaucrats within a global organization: the British Empire. I combine newly digitized personnel and public finance data from the colonial administration 1854-1966 to study the inner workings of a bureaucracy that controlled close to a fifth of the earth's land mass at its peak. Exploiting the ministerial turnover in London as a source of within-governor variation in social connections, I find that governors are more likely to be promoted to higher salaried colonies when connected to their superior during the period of patronage. At the same time, they provide more tax exemptions, generate less revenue, invest less and are less likely to be recognized for their service. The promotion and performance gaps disappear after the abolition of patronage appointments. Exploiting a fixed allocation rule to predict the appointment of connected governors unrelated to colony characteristics, colonies administered for longer periods by connected governors during the period of patronage exhibit lower fiscal capacity today. Exposure to connected governors after the removal of patronage has no long-run impact.

This paper tests two specific mechanisms through which individuals can form expectations about returns to investments in education: recognition for schooling performance, and exposure to successful students through family or social networks. Using a regression discontinuity design, we study the impact of two fellowship programs recognizing educational performance in secondary schools in India. We find that the fellowship award is associated with a significant increase in the perceived value of education, by both increasing the perceived mean of earnings (0.74 standard deviations (SD)) and decreasing the perceived variance in earnings (1.03 SD) associated with additional years of schooling. The effects spill over only selectively to social and family networks. Peers exposed to successful students do not update their beliefs but parents of fellows report higher perceived returns to education. Peers of fellows are however more informed about fellowship opportunities and report a higher intention to apply for the fellowship, thus contributing to the persistence of the potential impact of the fellowship across different cohorts.

Can severe penalties "encourage the others"? Using the famous case of the British Admiral John Byng, executed for his failure to recapture French-held Menorca in 1757, we examine the incentive effects of judicial punishments. Men related to Byng performed markedly better after his unexpected death. We generalize this result using information from 963 court martials. Battle performance of captains related to a court-martialed and convicted officer improved sharply thereafter. The loss of influential connections was key for incentive effects – officers with other important connections improved little after Byng's execution or other severe sentences.

This paper studies costly political resistance in a non-democracy. When Nazi Germany surrendered in May 1945, 40% of the designated Soviet occupation zone was initially captured by the western Allied Expeditionary Force. This occupation was short-lived: Soviet forces took over after less than two months and installed an authoritarian regime in what became the German Democratic Republic (GDR). We exploit the idiosyncratic line of contact separating Allied and Soviet troops within the GDR to show that areas briefly under Allied occupation had higher incidence of protests during the only major episode of political unrest in the GDR before its demise in 1989 - the East German Uprising of 1953. These areas also exhibited lower regime support during the last free elections in 1946. We argue that even a "glimpse of freedom" can foster civilian opposition to dictatorship.

Using exogenous variation in social proximity generated by an allocation rule, we find that bureaucrats assigned to their home states are perceived to be more corrupt and less able to withstand illegitimate political pressure. Despite this, we observe that home officers are more likely to be promoted in the later stages of their careers. To understand this dissonance between performance and promotion we show that incoming Chief Ministers preferentially promote home officers that come from the same home district. Taken together, our results suggest that social proximity hampers bureaucrat performance by facilitating political capture and corruption.

Patronage is a byword for poor performance but it remains pervasive around the world. We study the selection effects of patronage in the most successful navy in world history -- the Royal Navy between 1690 and 1849. Using newly collected data on the battle performance of over 5,800 naval officers promoted with and without family ties to the top of the navy hierarchy, we find that connected promotees outperformed unconnected ones. There was substantial heterogeneity by the admiral in charge of promotions. Discretion over appointments thus created scope for "good" and "bad" patronage. Because the majority of admirals promoted based on merit and did not favor their kin, the overall selection effect of patronage was positive.

Using data from an online labour market where the country of residence is the salient group characteristic, we document a mechanism through which collective reputation perpetuates group inequality. Using an IV strategy, we identify reputational externalities between an employer's first hire and the propensity to contract more workers from the same country. Employers, contingent on their first worker's performance, continue to almost exclusively hire from the same country. This coincides with a positive sorting response: Observing their predecessor's success, workers from the same country disproportionately apply and are of higher quality. Employers, facing better applicants, in turn provide higher ratings.

Who gives aid to whom and when? Aid accelerations, shocks and policies [+] - with Tilman Brueck, European Journal of Political Economy, 2012

Growth accelerations revisited [+], Econ Journal Watch, 2011

Hausmann, Pritchett, and Rodrik (2005) found that political regime changes, external shocks and economic reforms are statistically significant predictors of growth accelerations. Updating the data from 1992 up to 2000 and correcting for coding errors, this paper argues that the original results are fragile upon changes in period, sample, measures, and inclusion of controls. All the data are provided in a linked appendix.

Development through empowerment: Delivering effective public services: Review chapter, background paper for the Asian Development Bank Policy Report Empowerment and Public Service Delivery in Developing Asia and the Pacific, 2013

Does Security Play a Role in European Development Aid Policy? - with Tilman Brueck and Olaf de Groot, EUSECON Policy Briefing No. 11, 2011

Die Folgen der Ungleichheit: ein neues Maß der menschlichen Entwicklung - with Veronika Huemmer, DIW Wochenbericht, DIW Berlin, 2010