Meritocratic Bureaucracy and Entrepreneurship in Russia’s Regions

The paper examines the effect of meritocratic recruitment and tenure protection in public bureaucracies on entrepreneurship in Russia. Using data from an expert survey on the organizational design of public bureaucracies across a large sample of Russia’s primary administrative units, we find that higher frequency of merit-based entry to regional bureaucracy and lower frequencies of politically motivated dismissals are positively associated with lower investment risk and higher entrepreneurship rates. This is conditional on a number of socio-economic and political factors, and robust to alternative specifications. To rule out the problem of reverse causality, we instrument our key explanatory variable with a proxy for the level of capital-labor conflict across Russia’s provinces in the early 20th century.