Who Benefits from Meritocracy?

Does screening applicants using exams hurt or help the chances of candidates from disadvantaged backgrounds? Although a common critique to exams is that they might negatively impact applicants from poorer backgrounds, exams might replace other more discretionary criteria in which these applicants are at an even worse disadvantage. We study the equity implications of the 1883 Pendleton Act, which introduced competitive exams for selecting some federal employees. While the reform increased the representation of “educated outsiders” (individuals with high education but limited connections), it reduced the share of individuals from disadvantaged backgrounds. This decline was driven by an increased representation of the middle class, with limited change in the representation of applicants from upper-class backgrounds. The drop in the representation of workers from poorer backgrounds was stronger among applicants from states with more unequal access to schooling. These findings suggest that using exams might indeed pose an equity-efficiency trade-off. *dsmoreira@ucdavis.edu, seperez@ucdavis.edu. We thank Luiza Aires and Lisa Pacheco for outstanding research assistance, and Enrique Pérez for help with data collection. We have benefited from comments of Assaf Bernstein, Sandra Black, James Feigenbaum, Walker Hanlon, Leander Heldring, Rick Hornbeck, Sarah Quincy, Chris Meissner, Angela Vossmeyer, Tianyi Wang, Zach Ward, Noam Yutchmann, as well as by seminar participants at Corporación Andina de Fomento, NBER Postdocs Meeting, NBER Summer Institute DAE, University of British Columbia, Melbourne University, University of Ottawa, University of Southern Denmark and the 2021 Annual Cliometrics Conference.