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An Economic Analysis of Political Meritocracy

Chu, Angus C. and Kou, Zonglai and Wang, Xilin (2020): An Economic Analysis of Political Meritocracy. Forthcoming in: Economic Modelling

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The political system in China is often referred to as political meritocracy. This study develops a simple model of political meritocracy that captures democracy and dictatorship as special cases. Then, we use the model to explore the strengths and weaknesses of a meritocratic system relative to a democratic system. We find that political meritocrats would choose economic policies that are more conducive to economic activities and lead to higher income but less public goods. Whether the meritocratic or democratic equilibrium achieves higher social welfare depends on the distribution of individuals' abilities. If the median voter's ability is lower than the mean of the population, then the meritocratic equilibrium can achieve higher social welfare than the democratic equilibrium. Also, there is a threshold degree of political inclusiveness in the meritocratic system above which political meritocracy dominates democracy in social welfare, and this threshold degree is increasing in the median voter's ability.

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