Party Membership as a Signal in China's Labor Market

Abstract

This paper examines how grassroots political selection influences the market-oriented labor market in authoritarian regimes from a signaling effect perspective. In China, more than 65% of college students apply to join the Chinese Communist Party (CCP), which has a rigorous recruitment process that takes at least two years. The CCP recruits students with high noncognitive abilities that are valued but difficult for potential employers to observe. As a result, party membership in the labor market serves as an informative signal of high noncognitive abilities. Using the Chinese College Student Survey, this study finds significant self-selection and party-selection based on noncognitive abilities in the CCP's recruitment process; moreover, party members are 5.9 percentage points more likely to find a job and earn a 6.4% wage premium compared to non-party members in the labor market. Finally, a field experiment is conducted to identify the signaling effect of party membership on the labor market by sending fictitious resumes to potential employers. The results indicate that more than half of the party membership advantage can be attributed to the signaling effect.