State Employment as a Strategy of Autocratic Control in China

Abstract This paper presents evidence that autocrats use state-owned firms to prevent unrest via employment provision, a role that helps explain these low-productivity firms' favorable treatment and persistence across settings. I use variation in a regional conflict in Xinjiang to establish that Chinese state firms respond to threats of ethnic unrest by hiring minority men. Concurrently, wages rise and private employment falls among this group. These patterns are consistent with a theoretical framework of governmentsubsidized, pacification-motivated state employment, and I use the framework to quantify the implicit subsidy that state firms receive for hiring male minorities.