Evolution of Institutional Designs: Endogenizing the History of Allocation Procedures for the Indian Civil Services

Abstract

I endogenize the evolution of allocation procedures used to assign elite civil servants to states across India post-Independence. Using detailed knowledge of the history of matching mechanisms and the civil servants' rank-order preferences, I highlight the struggle over allocation procedures between Prime Minister and civil service. The Prime Minister wants an equitable distribution of bureaucratic quality across the country for balanced development. Whereas the civil service wants more weight to be given to their own preferences over where to work. The aspirations of the executive and bureaucracy remain at odds because bureaucrats' preferences are correlated: avoiding underdeveloped areas and conflict zones. I find that the institutional pendulum swings between allocation procedures the Prime Minister favors and those the bureaucracy favors, depending on the strength of the Prime Minister. Strong Prime Ministers (proxied by majority governments) can resist pressure from the bureaucracy. Thereby, they institute allocation procedures that achieve a more equitable distribution of bureaucratic quality, albeit by giving bureaucrats’ preferences less weight. On the other hand, weak Prime Ministers (proxied by coalition governments) are more prone to the bureaucracy’s pressure. In turn, they institute allocation procedures that give most bureaucrats more preferred assignments, though at the expense of disadvantaged regions systematically receiving lower-quality bureaucrats.