For some time, the importance of the effect of institutions on economic outcomes has been well-rehearsed under the corpus of literature popularly known as “New Institutional Economics.”Footnote 1 While few would disagree with Douglass North’s persuasive proposition that “institutions matter (for economic performance),” it was only two decades ago when Acemoglu et al. (2001) elegantly demonstrated the causal bearing of institutions on long-term economic performance in “the colonial origins of comparative development.”Footnote 2 Since then, their seminal article has influenced empirical research into institutions and culture so profoundly that studies of comparative historical development have flourished to this day.Footnote 3 It is thus obvious that my endeavor to examine the persistent effects of China’s civil service examination system (“keju”)—the longest-lasting meritocratic bureaucracy in China and the world’s first—on human capital outcomes today (Chen et al. 2020) was premised on the concept that historical institutions can generate either direct or indirect long-lasting effects through the cultural traits that they foster.Footnote 4

As remarked elsewhere, China failed both to undergo an industrial revolution and to adopt the “constraints on the executive,” but nonetheless “was the first in the world to have developed a meritocratic bureaucracy” (Kung 2021, p.159; see also Landes, 1998; Stasavage, 2011). The key question, from this perspective, is what makes meritocracy an important topic, worthy of scholarly attention? Meritocracy is arguably important because it is broadly concerned with what North (1990) termed the “rules of the game”—rules that have implications for incentives and economic performance. Consider the four qualities or virtues that Adrian Woodridge (2021) recently laid out when writing on this subject. To him, meritocracy ought to embrace a socially mobile society based on natural talents; to allocate job opportunities based on open competition; to reduce if not entirely eliminate discrimination based on observable traits; and, in order to allow the former conditions to operate smoothly, to provide education to all. These virtues are important as they allegedly lay at the heart of “the four great revolutions that created the modern world” (p.11).Footnote 5 But meritocracy is not without its critics. For example, Markovits (2019) criticizes meritocracy for having turned into a “trap,” as seemingly meritocratic societies have begun to transmit inherited privilege from one generation to another through the channel of elite education, blocking social mobility (see also Sandel 2020; Young 1958). Like the criticism made by Bourdieu and Passeron (1990) of the reproduction of elites through education and culture in France, these criticisms are directed not so much at the virtues of meritocracy but rather their prevention from being realized in a society that espouses its intrinsic values.

To the extent that meritocracy is seen in a positive light, I aim at three goals in this essay. First, I provide a detailed assessment of whether the civil service examination system in imperial China qualified as a meritocracy, based on a descriptive analysis of the institution that evolved during the Song dynasty (c. 987–1267CE). Second, in the light of the fact that meritocracy emerged in imperial China long before either the French Revolution or the Industrial Revolution (Hobsbawm 1996), I provide a narrative of its origins based largely on the account of Chen and Kung (2022). Specifically, I show that (1) the civil service examination system had indeed become more meritocratic by several of the yardsticks mentioned above; and (2) the genesis of this meritocratic bureaucracy was largely an “accident.” Specifically, it came about as a consequence of both a “commercial revolution” and the accompanying rise of a merchant class who collectively fought for their children to be qualified for the examination (“inclusivity” in short), and a founding Song emperor who tried to dismantle the military, who fought with him in a coup, by expanding the civil service examinations greatly. Last, but not least, I provide a summary of the existing findings on keju’s persistent effects on both human capital outcomes (Chen et al. 2020) and occupational choice (Kung 2021).

The Song’s Civil Service Examination System as a Meritocratic Bureaucracy

Prelude to the Birth of the Civil Service Exam System—the Aristocratic Dominance

Imperial China had a vast territory that was roughly the size of Europe, except it was governed as a single country. The emperor faced a major challenge in selecting competent (and hopefully also loyal) officials to govern this vast swathe of land. For more than a millennium, counting from unification in the Qin dynasty (c. 221–206BCE), imperial China was governed by clans of aristocrats. This means that officials were selected from those with hereditary rights to serve in the court. But in fact serious attempts were already underway in the Qin to establish a government independent of the court, but it was aborted by the fall of the Han dynasty (202BCE–9CE; 25–220CE). The efforts to select officials using more formal methods were revamped once again when the Sui-and-Tang dynasties (581–907CE) reunited China.

To a large extent, the idea of adopting a civil service examination system was inspired by the power struggle between the Sui emperors and the aristocrats that surrounded him—essentially the landed elite—who also claimed a right to manage the dynastic regime. In the absence of an institution, the “selection” question was fraught with politics, as aristocrats of different “factions” jockeyed for the precious positions in which much power and resources were vested. For example, in the 300 years or so of their rule, the Sui-Tang dynasty basically maintained the system of selecting officials based on “recommendation”—an institution first implemented during the Han dynasty a few centuries previously. The way it worked was that every prefecture (equivalent to a municipality in modern times) was entitled to nominate up to three men to be presented to the imperial court and examined by higher officials, who would then rank them according to their “talents and character.” Candidates who scored highly according to these criteria would be given jobs straight away, while lesser-ranked ones were given more training and waited for other chances to arise. However, the fact that the Sui dynasty was still overwhelmingly dominated by aristocrats meant that selection was confined to a small circle, defeating the effort to creating a fair and square game for a larger group.Footnote 6

Perhaps because it arose out of the concern to rectify this problem, the civil service exam system was eventually introduced in the Tang, albeit in an embryonic form. That is, the Tang dynasty no longer required nominations from the prefectural government; anyone who wished to sit for the civil service exam could simply put in an application and take the exam accordingly. The only restriction that still applied was that descendants of merchants and artisans were prohibited from taking the exam, for fear of conflict of interest; as merchants and artisans worked strictly in the private sector whereas officials were supposed to be serving the public (Qian, 2012, p.56). This restriction thus unwittingly helped the aristocrats to retain their monopoly over selection. At any rate, those who succeeded were awarded the jinshi degree, one which gave them the prerogative of serving in the bureaucracy subject to passing an oral examination of verbal proficiency, mannerism, and administrative skills—an exam conducted by the Ministry of Personnel (libu).Footnote 7

While the continuing dominance of aristocrats in the Tang dynasty meant that the lion’s share of high-ranking jobs were still reserved for landed aristocrats or those with hereditary rights, i.e., relatives of previous office-holders, creating an institution that allocated the highly valued official jobs based on raw talents must have encouraged those who were eligible for office to sit the exam just to show that they would still be qualified despite competition. Indeed, Fig. 1, which plots both the number and share of jinshi held by aristocrats, shows that the latter still dominated the jinshi population in the Tang dynasty—the link between class and success was not yet broken. This inequality was greatly alleviated in the Song dynasty, when the civil service system expanded vastly and was opened to participation by merchants and artisans; consequently, the share of jinshi scholars from an aristocratic background declined precipitously (see Kung 2021). Moreover, given that officialdom was the career path destined for jinshi scholars, I coded the respective share of aristocrats and commoners among the high-ranking officials (specifically ministers) across 18 dynastic regimes in imperial China from the Twenty-Five Histories (Ershi wushi), and indeed found that it was only from the Song dynasty onwards that the share accounted for by commoners began to outpace that of aristocrats since Han (Fig. 2).

Fig. 1
figure 1

Source: Adapted from Kung (2021)

Number of Jinshi and Share of Aristocrats in the Jinshi Population from Tang to Qing.

Fig. 2
figure 2

Data Source: The Twenty-Five Histories of China (Ershi wushi)

Share of Aristocrats and Commoners in High-ranking Officials, From 219BCE to 1911 CE.

The Song Civil Service Examination System as a Meritocratic Institution

By establishing a civil service examination system, Tang opened up its process of political selection, attracting those who were eligible to take part. However, a fully meritocratic institution had to wait until the Song came along. The following features are astoundingly meritocratic even when judged by today’s standards.

To begin with, the scale of the examination increased sevenfold, from a total of 6,572 in the Tang dynasty to 42,509 in the Song dynasty.Footnote 8 According to John Chaffe (1985), a historian of Song dynasty China, the civil service exam was so popular that the number of scholars taking the exam increased markedly from 20,000–30,000 in the early 11th century to 79,000 in the 12th century, and surged further to 400,000 by the mid-13th century.Footnote 9

Second, in addition to this vast expansion, the Song emperor also removed the restrictions that prevented the children of merchants and artisans from taking the civil service exam, greatly enhancing social mobility. In Sui and Tang, an overwhelming percentage of the jinshi, 82%, were still aristocrats. In the Song, already more than half of them (56.3% in 1148 and 57.9% in 1256) came from families with no forebears whatsoever in officialdom (Kracke 1947). Echoing our observations in Figs. 1 and 3 shows, more specifically, that close to 60% of the jinshi for the years 1148 and 1256 had no forebears in the previous three generations who had achieved this qualification.

Fig. 3
figure 3

Source: Adapted from Kracke (1947)

Percentage of Jinshi with different strengths of official tradition in their family backgrounds in two Keju Exams (1148 and 1256).

Third, the Song emperor also eliminated an existing practice that apparently favored those from privileged families. Known as “mating rituals,” the civil service exam in Tang allowed, or perhaps even encouraged candidates to show their best work to the examiners (some of whom were their teachers), who fought for the honorific title on behalf of their favorite candidates. This practice was abolished in Song, by a practice that concealed the candidate’s name on the exam script and, additionally, answers were copied by a professional copier to avoid examiners from recognizing their students’ handwriting. In short, the exam scripts of all candidates were graded blindly.

Fourth, while a civil service exam already existed in Tang, only a small percentage of candidates were allocated official positions based on exams, but the Song made sure that everyone had a chance and that this chance was contingent on exam performance alone.

Fifth, unlike feudalistic privileges in medieval Europe, which could be inherited, the honor, prestige, and other benefits that came with the jinshi title were not heritable. Irrespective of how talented their forefathers were, glory seekers had to persevere through long and arduous years of studying and, when the time came they had to battle for the glory themselves—the title could not be passed down from one generation to another.Footnote 10 This particular feature of the civil service exam system has important implications for social mobility. To be sure, the civil service exam still favored the privileged families, i.e., those who enjoyed better access to books, academies, and teachers (e.g., Elman 2000). However, based on the analysis of a data set constructed for the late Qing dynasty (1796–1905), researchers have found that, while good family background did facilitate a candidate’s exam success, there was also substantial downward mobility; more than half of the fathers who were jinshi themselves had a harder time ensuring their children performed equally well in the exam (Jiang and Kung, 2021). The fact that there was downward as well as upward social mobility in the presence of family inequality underscores a key element of meritocracy—that it is possible to achieve upward social mobility based on natural talent.

Finally, huge strides were made in the Song as far as the provision of education was concerned. Given the large number of candidates taking the exam, an educational infrastructure commensurate with the growing pool was necessary to help the students to prepare. In the Han dynasty, education was provided by a pre-modern university known as Taixue in Chinese. In the Tang dynasty, education was provided privately by the aristocrats themselves. With far more students interested in taking the civil service exam Song had to come up with a new solution. As local governments lacked the necessary revenue to finance education, Emperor Taizong ingeniously allowed the merchants to pick up the slack, as they were eager to do so. Indeed, out of the 932 academies established in the early Song, 720 or 77% were funded by merchants. This compared favorably with the Tang dynasty and the Five Dynasties and Ten Kingdoms combined (618–907CE), which saw the establishment of a mere 72 private academies. The vast expansion in the scale not only of the exam but importantly also education is clear testimony to the virtue required of a meritocracy, i.e., the provision of education to all.

Commercial Revolution as Catalyst

The billion-dollar question is what transformed an initially aristocratic civil service exam system into one that hardly retained any trace of discrimination against candidates based on caste (i.e., the aristocrats). Three concomitant changes were decisive. The first was the rise of a merchant class as a consequence of a “commercial revolution”; the second an emerging need to manage a growing number of market towns; and last, but not least, was the emperor’s preference to remove the threat typically posed by a powerful military and/or his close relatives — the aristocrats.

Emergence of a Merchant Class

For well over a millennium, the imperial Chinese economy was predominantly agricultural and subsistence based. There was little if any trade between regions endowed with different comparative advantages, and hardly any use of money. But with the establishment of Song the economy became distinctly commercialized and was unsurpassed anywhere in the world probably until the Industrial Revolution (Hartwell 1982; see also McNeill, 1963). In a nutshell, spurred by an upsurge in agricultural productivity and surplus, regional specialization in the production of a wide range of commodities based on comparative advantage de1997epened, and markets expanded—thanks to a revolution in water transport that began in the Sui-Tang dynasty and became well-developed in Song times (Elvin 1973; Shiba 1970; among others). Kelly (1997) characterizes the Song transformation as epitomizing a process of “Smithian growth.”Footnote 11 Not surprisingly, growing commercialization led to the emergence of a merchant class, who, like merchants elsewhere, sought to increase their political influence.

Given the strong and lasting influence of Confucianism in imperial China, and the social pecking order that placed scholar-officials above every other occupation, top of the merchants’ wish-list was to have their children who were previously excluded included in the civil service exam. This appeal coincided with the emperor’s own interest, who on the one hand was keen to expand the bureaucracy to help administer the growing commercial economy, and on the other hand to keep at bay unwarranted interference from the aristocrats. What probably helped the merchants was their tax contributions. Already making up one third of the overall taxes in 997, commercial taxes grew to account for more than two-thirds, 67.76%, of the overall tax revenues in 1077 (Bao, 2001).Footnote 12 By plotting the number of market towns—a proxy for commercialization—against jinshi density (i.e., the number of jinshi normalized by the prefectural population) in the Song dynasty, Fig. 4 shows a positive correlation between the two, lending support to the existence of a close link between commercialization and the development of a meritocratic institution.

Fig. 4
figure 4

Source: Plotted based on Chen and Kung (2022)

Correlation between commercial development (Market Towns) and local Keju achievements in Song Dynasty China.

Growth of Market Towns

An inevitable consequence of the Song commercial revolution was an enormous increase in product specialization and trade expansion across a substantially wider geographical region, both of which entailed more frequent exchanges and new trade venues. By comparison, while there were only a few dozen market towns in the entire Tang dynasty, the early Song, viz., the Northern Song (c. 960–1127), already had several thousand, many of which sprang up in the countryside and became thriving hubs of commercial activity alongside the walled cities which served the established administrative and military functions (von Glahn, 2016, p. 242). As these new market towns were more than just periodic meeting sites, they required day-to-day management by government officials. Historians Golas (2015) and Hartwell (1982) observe that the market towns in Song in fact went beyond the boundaries of trade, as they also called for a new mandate that entailed the management of an increasing number of territories with dense populations. The civil service exam was the only mechanism that could produce the qualified officials required to administer the growing commercialization. Fig. 5, which georeferences the distribution of market towns in Northern Song, shows that the market towns covered a large part of the territory, but growth was concentrated in the southeast.

Fig. 5
figure 5

Source: Adapted from Chen and Kung (2022)

Geographic distribution of market towns (Proxy for Commercial Development) in Song Dynasty.

The Emperor’s Preference

The Song dynasty was founded by Zhao Kuangyin, a distinguished military general of the Later Zhou dynasty, a short-lived imperial dynasty and the last of the Five Dynasties that controlled most of northern China, by staging a coup d’etat that forced the last emperor of the Zhou dynasty to abdicate the throne in his favor. Naming himself Emperor Taizu, Zhao was patently aware of the potential havoc that military officers could wreak on the incumbent ruler. Indeed, Chinese history is replete with instances of army commanders who brought down various dynasties. Tang was no exception.

Like many other dynasties in Chinese history, Tang was vulnerable to potential threats of invasion from various nomadic tribes from nearly all its borders but especially that in the north (Fig. 6). To ensure that the nomads were not lurking behind their backs, central officials were dispatched from time to time to check on the so-called “fence towns” or fanzhen. Owing to their strategic military importance, these officials were often also given unchecked fiscal and personnel powers, becoming de facto semi-autonomous warlords under the euphemistic title of “regional commissioners” or jiedushi. An Lushan, a military general of Sogdian descent, was an (extreme) example of a jiedushi who was put in charge of guarding up to three strategic regions in the north by a negligent emperor, but ended up staging a damaging rebellion. While An was crushed by the concerted effort of other regional commissioners after a protracted war that lasted eight years, the number of warlords with de facto autonomous power at the end increased, with the Tang emperor effectively losing authority over the northern provinces (see, e.g., Tackett 2014). Realizing that the autonomous warlords were the primary cause of the fall of the Tang, Emperor Taizu not only “dissolved the militarists’ power with a cup of wine” by toasting the generals for having reached retirement (Morris, 2010, p. 373; Qian, 2012), he also encouraged the formation of a government composed primarily of civilians. The vast expansion of the civil service examination system was thus by no means a consequence of the whims of the founding Song emperor; he probably saw constraining access to power by both aristocrats and militarists alike as a useful way to preserve his power.Footnote 13

Fig. 6
figure 6

Source: Adapted from Chen and Kung (2022)

Territorial Boundary of Tang Dynasty.

The Persistent Effect of the Civil Service Exam System

From Institutions to Culture

Regardless of whether we take Sui (c.581–618CE) or Tang (c.618–907CE) as representing the dynasty from which keju originated, by the time it was abolished (c. 1905CE) keju had lasted in the Middle Kingdom for more than a millennium. The privileged social status that scholar-officials enjoyed in the imperial Chinese society was an important reason why keju attracted hordes of scholar to compete in the civil service exam; indeed, from Song on it was the only road to high officialdom.

The fact that success in keju brought immeasurable income and wealth has been well-documented. Using the Qing dynasty—China’s last dynasty—as an example, Chang (1962) points out that the 2% of successful civil exam scholars in the population earned a salaried income that was about 16 times greater than that of a “commoner” or someone without even the lowest civil exam qualification, accounting for 24% of the nation’s income. Moreover, that was only a fraction of scholar-officials’ earnings. The historian further noted that, unlike modern times when officials are not allowed to engage in businesses outside of their public duties, in earlier times they were allowed to run a variety of businesses such as real estate, banks, jewelry shops and so forth, and obtained additional income that was typically many times greater. The promise of a pecuniary reward over and above that obtained from civil service income may explain why, the small success rate of the prestigious examination notwithstanding, many candidates still strove to compete for the coveted qualification.

And pecuniary returns were by no means the only incentivizing factor. Attaining the honor of jinshi also bestowed prestige and recognition upon his own family and the local community at large, as was reflected in a wide variety of ritual honors and recognitions by the lineages and community to which he belonged. For example, his name would go down in history in the books of family genealogy and local gazetteer, with arches, gateways, and temples erected in his name and honor. With his name carved on the Confucian Temple in the national capital a jinshi would be recognized by the nation at large (Ho 1962). It was the combination of these rewards—pecuniary and otherwise—that provided strong incentives to climb the social ladder in imperial China. Small wonder that the merchants, no matter how rich they were, still devoted resources to help their sons and grandsons to succeed in the civil service exam (Elman 2000; Needham 1969), with preparation for it beginning at the tender age of 6–7 years old (Rawski 1979).

To the extent that institutions have embedded incentives, it follows that the civil service exam system probably produced a culture of valuing education and learning that self-reinforces itself over time. The eminent philosopher, Russell 1922, had made precisely that insightful remark in The Problem of China nearly a century ago:

‘at any rate, for good or evil, the examination system profoundly affected the civilization of China. Among its good effects were a widely-diffused respect for learning\(\dots\)’ (p. 46).Footnote 14

By constructing and analyzing a unique data set linking jinshi achievements in the last two dynasties of imperial China—Ming and Qing combined (a total of 543 years), Chen et al. (2020) show that contemporary residents in essentially the same historical prefectures that had the highest jinshi density historically (the absolute number normalized by population size) have systematically attained higher numbers of years of schooling today (measured using the census data of 2010)—a relationship that can be seen clearly in Fig. 7. Assuming that prefectures with the highest jinshi density had produced the strongest keju culture, which may have lasted to this day, the authors find that a doubling of jinshi in each 10,000 people leads to an 8.5% increase in the number of years of schooling in 2010, which in turn translates into a marginal effect of 0.74 years when evaluated at the mean of 8.712—not a trivial result given the skewed distribution of jinshi density.Footnote 15 More recently, I showed that the civil service exam also had a lasting effect on choice of occupation several centuries later. Specifically, contemporary residents in the historical prefectures with a high success rate in the civil service exam are more likely to be drawn into occupations with the highest pecuniary returns such as senior executives of private firms or entrepreneurs, rather than working as government officials (Kung 2021).

Fig. 7
figure 7

Source: Adapted from Chen et al. (2020)

Correlation between Historical Success in Keju and Contemporary Human Capital Outcomes.

Cultural Transmission

A question arising from keju’s persistent effect is how a culture that values learning and education, as produced by the civil service exam, is transmitted over time. A particular vantage point from which to make sense of this pertains to the “vertical” transmission of cultural traits across generations within a family through parental indoctrination and input (Becker, 1991; Doepke and Zilibotti, 2014; Guryan et al., 2008). While this makes intuitive sense in theory, testing it empirically is challenging. Chen et al. (2020) overcome this problem by using a set of relevant questions contained in various survey instruments,Footnote 16 and linking them to an explanatory variable that they uniquely constructed to identify the underlying mechanism. Calling it ancestral jinshi density, this explanatory variable essentially enumerates the survey respondents’ ancestors in a particular population who had obtained a jinshi qualification in the Ming-Qing period. The authors then matched the surname and hometown (prefecture) information of these respondents with those of their seeming ancestors, based on the assumption that people born in the same prefecture and sharing the same surname are likely to be related along the patrilineal line (Clark, 2014).Footnote 17 To caution against the pitfall that the Chinese have fewer surnames so that people sharing the same surname may not necessarily be related by blood, the authors dropped the top five surnames and their finding remained valid.Footnote 18

Indeed, Chen et al. (2020) found that survey respondents with more jinshi ancestors are significantly more likely to view education as ‘the most important determinant of social status’ and prefer their children to have more years of schooling. At the level of everyday life, the parental respondents devoted more time and effort to supervising their children’s homework by, for instance, frequently giving up watching TV. To ensure that what they are capturing is cultural transmission rather than inherited ability, the authors further control for the parental respondents’ memory and logic test scores, their educational level and income, and a battery of other controls. Their evidence for cultural transmission remains intact.

To further verify the cultural transmission channel, the authors also examined the effect of ancestral jinshi density on the children’s test scores (specifically word and math ability tests) and their cognitive and non-cognitive performance. They found that the key explanatory variable has a significantly positive impact on both test scores and cognitive skills as well as non-cognitive performance. For example, children with a higher jinshi density were less likely to be absent from class and likely to spend more time studying.

Social Capital and Political Elites as Additional Channels

For a culture of learning and valuing education to become deeply embedded in society it must probably go beyond transmission within the family alone, but also into other channels such as an edifice of educational infrastructure, networks of social capital and perhaps political elites, and so forth. Social capital and the collective action that it facilitates represents a good case in point (e.g., Putman, 2000; Satyanath et al., 2017). Given that only a small percentage of the exam-takers actually passed and earned the qualification of jinshi, those who did became part of an exclusive network of the social elite, who in due course were more likely to create a nontrivial amount of social capital through providing public goods and engaging in philanthropic activities, for example. In imperial China, clan or lineage organization was a major example of social capital. For example, powerful lineages could, by dint of their wealth, enable their descendants to receive a better classical education by simply supplying better schools and teachers (Elman 2000; McDermott, 1997). Using the number of genealogies compiled in a prefecture in the Ming-Qing period as a proxy for clan strength,Footnote 19 Chen et al. (2020) find that this variable is indeed significantly and positively explained by jinshi density. A similar finding applies to charitable organizations engaged in famine relief and running orphanages in the 1840s. Taken together, these two pieces of evidence combine well with the proposition that, like cultural transmission, social capital is also an important channel in fostering the keju culture.

Similarly, as jinshi scholars entered officialdom they also joined the political elite, many of whom ploughed educational and other resources back into their hometowns, perpetuating a culture of learning and valuing education by increasing the competitiveness of students in exams. To verify this, Chen et al. (2020) regressed high-ranking officials in both the late Qing and Republican period on jinshi density and found that the latter does have a significantly positive effect on the former dependent variables, suggesting that part of the persistence of keju culture also goes through the channel of elite entrenchment. However, this persistence ceased as soon as the Communists took power in the early twentieth century, as the criteria for political selection no longer relied on the exam culture on which the previous regimes had heavily relied; a finding that serves, in a way, as a placebo test that confirms the validity of earlier findings on the channel of political elites.


As an ideology embraced by many, meritocracy advocates the allocation of opportunities based on talents and effort and promotes social mobility. Strangely, however, it has been strongly criticized in recent years on the grounds of elite entrenchment, as meritocratic status has allegedly been transmitted persistently across generations, reproducing entrenched pockets of elites rather than levelling the playing field over time, primarily if not entirely through elite education. Echoing Wooldridge (2021), who laments that “frustrating debate about meritocracy is due to the lack of a historical perspective” (p. 10), this paper represents an attempt to understand how this important meritocratic institution arose in the first place, how meritocratic it was by today’s standards, and its persistent effects.

In sharp contrast to Max Weber’s prediction that a country deeply rooted in a Confucian culture was unlikely to produce a bureaucracy based on rationality, the meritocratic civil service exam system that emerged in Song dynasty China around the first millennium turned out, unintentionally, to be the world’s first meritocratic institution. It is an institution that includes most—if not all—the features that a meritocracy is supposed to include. Under that system, desirable job opportunities were essentially allocated on the basis of exam success, which in turn was predicated on talent and hard work. While privileged families undoubtedly enjoyed an advantage vis-à-vis their poorer counterparts, “legacy” was clearly not one of the determinants of exam success. Ultimately, the restriction on passing the coveted qualification onto the next generation ensured social mobility—downward as well as upward—to be maintained. Combined, these qualities perhaps explain why the Chinese meritocratic institution that came of age nearly 800 years earlier than the French Revolution and Industrial Revolution was greatly appreciated by a number of the Enlightenment thinkers such as Voltaire, Quesnay, and Christian Wolff, who all viewed it as a superior institution to the traditional European aristocracy.

The genesis of this meritocratic institution was however “accidental” to a large extent. It owed much of its origin to the combined consequences of the rise of a merchant class whose foremost interest was to fight for their children’s inclusion in the imperial Chinese bureaucracy; the Song emperor’s preference for reducing the influence of the military under his rule; and not least the need for more officials to manage the substantially larger number of market towns that flourished in the wake of commercialization. All of these ensured a vast expansion of the civil service examination.

Regardless of how glorious it was in the distant past, the world’s first meritocratic institution would have been consigned to history if the effects of this historical institution were bounded by time. It was Russell's (1922) insightful observation that the civil service exam had produced a “widely-diffused respect for learning” that inspired us to examine its possible persistent effect on human capital outcomes. And it is from that particular vantage point that we found, empirically, that it is education, rather than material wealth, that is considered important to transfer to the next generation—at least that appears to be the case in the Confucian culture—a belief to which the Chinese have strongly subscribed.