Page 35 - The South China Business Journal

both state and non-state sectors) may draw talented
people away from launching startups.
To shed further light on the draw of jobs in the state
sector, the researchers compared the extent of state
employment in local economies and the propensity
of individuals to work for the state or launch a
startup. They found that an increased presence of
state employment in one’s college location correlates
with a more pronounced disinclination toward
entrepreneurship. To highlight the loss to firm
creation, the authors extrapolate that if individuals
at the 75th percentile of ability moved from a high
state-employment region to a low state-employment
region, their likelihood of starting a business would
increase by 16.9%. Taken together, these findings
suggest that the state sector diverts talented
individuals away from entrepreneurship. The relationship between exam score and likelihood of
founding a 昀椀rm
State sector plays outsized role in talent
allocation. This study underscores the significant source of state capacity; on the other hand, there is
role of China’s government in shaping talent a risk that this talent may be diverted to rent-seeking
allocation. Individuals with higher college entrance behaviors that generate limited growth potential
exam scores are, perhaps unexpectedly, less likely or social value. The study suggests that the state’s
to create firms. Instead, they often gravitate toward strong presence may draw talent away from more
careers outside entrepreneurship, particularly in the vibrant, innovative sectors, highlighting a tradeoff
state sector. The implications of this are nuanced: on between building state capacity and fueling private
one hand, talent in the state sector is an important sector dynamism.