The institution of merit: a Chinese case study

Professor, Chinese University of Hong Kong.

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While there is a broad consensus in many countries that places at elite colleges should be allocated by merit, how merit should be measured is a hotly contested issue. In this paper we focus on the case of China. Under the current system, within province admissions are determined by a college entrance exam. But as tests scores are not comparable across provinces, universities must assign separate admission quotas to different provinces. A generally held belief is that elite universities in Beijing and Shanghai discriminate against out-of-province students.

We investigate how elite Chinese universities choose between applicants from different provinces. We construct a model of that captures the key features of the Chinese system. In our model, universities care about student quality, but may disagree over the student quality in different provinces. We show that in equilibrium each university should set admission quotas to equalize the marginal student quality in different provinces. This implies that a university should assign a bigger quota to a province where the university is popular or where the student quality is higher.

We estimate the model using the quotas and cutoff scores of one hundred top Chinese colleges. We find that different universities tend to rank the student quality in different provinces similarly. If one university considers the average student quality in one province is higher than that in another province, then other universities are likely to consider the same. There are sizable disparities in average student quality across provinces. In particular, provinces with higher pre-college education spending, including Beijing and Shanghai, have significantly higher student quality. Higher ranked universities and those directly under provincial control tends to bias in favor of home students, but the magnitude of the bias is small. Counterfactual experiments show that regional inequalities in admissions is driven largely by the disparities in student quality.