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Economic Returns to Communist Party Membership: Evidence From Urban Chinese Twins

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  • Hongbin Li
  • PakWai Liu
  • Junsen Zhang
  • Ning Ma

Abstract

This article estimates the returns to membership of the Chinese Communist Party using unique twins data we collected from China. Our OLS estimate shows a Party premium of 10%, but the within-twin-pair estimate becomes zero. One interpretation is that the OLS premium is due to omitted ability and family background. This interpretation suggests that Party members fare well not because of their political status but because of the superior ability that made them Party members. The estimates are also consistent with another interpretation that Party membership not only has its own effect but also has an external effect on siblings. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 117 (2007)
Issue (Month): 523 (October)
Pages: 1504-1520

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Handle: RePEc:ecj:econjl:v:117:y:2007:i:523:p:1504-1520

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References

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  1. Freeman, Richard Barry, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Scholarly Articles 4631951, Harvard University Department of Economics.
  2. Liu, Zhiqiang, 2003. "The Economic Impact and Determinants of Investment in Human and Political Capital in China," Economic Development and Cultural Change, University of Chicago Press, vol. 51(4), pages 823-49, July.
  3. Orley Ashenfelter & Cecilia Rouse, 1998. "Income, Schooling, And Ability: Evidence From A New Sample Of Identical Twins," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 253-284, February.
  4. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
  5. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
  6. Simon Johnson & Todd Mitton, 2001. "Cronyism and Capital Controls: Evidence from Malaysia," NBER Working Papers 8521, National Bureau of Economic Research, Inc.
  7. Hongbin Li & Lingsheng Meng & Junsen Zhang, 2006. "Why Do Entrepreneurs Enter Politics? Evidence from China," Economic Inquiry, Western Economic Association International, vol. 44(3), pages 559-578, July.
  8. Hongbin Li & Lingsheng Meng & Junsen Zhang, 2005. "Why Do Entrepreneurs Enter Politics?," Discussion Papers 00009, Chinese University of Hong Kong, Department of Economics.
  9. Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1371-1411, November.
  10. John Bound & Gary Solon, 1998. "Double Trouble: On the Value of Twins-Based Estimation of the Return to Schooling," NBER Working Papers 6721, National Bureau of Economic Research, Inc.
  11. Neumark, David, 1999. "Biases in twin estimates of the return to schooling," Economics of Education Review, Elsevier, vol. 18(2), pages 143-148, April.
  12. Li, Hongbin & Meng, Lingsheng & Wang, Qian & Zhou, Li-An, 2008. "Political connections, financing and firm performance: Evidence from Chinese private firms," Journal of Development Economics, Elsevier, vol. 87(2), pages 283-299, October.
  13. Agrawal, Anup & Knoeber, Charles R, 2001. "Do Some Outside Directors Play a Political Role?," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 179-98, April.
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Citations

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Cited by:
  1. Ming Lu & Jianzhi Zhao, 2009. "The Contribution of Social Networks to Income Inequality in Rural China: A Regression-Based Decomposition and Cross-Regional Comparison," Global COE Hi-Stat Discussion Paper Series gd08-019, Institute of Economic Research, Hitotsubashi University.
  2. Simon Appleton & John Knight & Lina Song & Qingjie Xia, 2009. "The Economics of Communist Party Membership: The Curious Case of Rising Numbers and Wage Premium during China's Transition," Journal of Development Studies, Taylor & Francis Journals, vol. 45(2), pages 256-275.
  3. Mark Rosenzweig & Junsen Zhang, 2014. "Co-residence, Life-Cycle Savings and Inter-generational Support in Urban China," NBER Working Papers 20057, National Bureau of Economic Research, Inc.
  4. Zhang, Jian & Giles, John & Rozelle, Scott, 2012. "Does it pay to be a Cadre ? estimating the returns to being a local official in rural China," Policy Research Working Paper Series 6082, The World Bank.
  5. Guggiola Gabriele, 2009. "A Political Economy Perspective of the Chinese Government Tactical Behavior," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200908, University of Turin.
  6. He, Xiaobo, 2013. "Wages and Access to International Markets: Evidence from Urban China," MPRA Paper 44537, University Library of Munich, Germany.
  7. Hongbin Li & Mark Rosenzweig & Junsen Zhang, 2008. "Altruism, Favoritism, and Guilt in the Allocuation of Family Resources: Sophie's Choice in Mao's Mass Send Down Movement," Working Papers 965, Economic Growth Center, Yale University.
  8. Suchuan Zhang, 2014. "Impact of Job Involvement on Organizational Citizenship Behaviors in China," Journal of Business Ethics, Springer, vol. 120(2), pages 165-174, March.
  9. Li, Hongbin & Meng, Lingsheng & Shi, Xinzheng & Wu, Binzhen, 2012. "Does having a cadre parent pay? Evidence from the first job offers of Chinese college graduates," Journal of Development Economics, Elsevier, vol. 99(2), pages 513-520.
  10. Heywood, John S. & Siebert, W. Stanley & Wei, Xiangdong, 2009. "Job Satisfaction and the Labor Market Institutions in Urban China," IZA Discussion Papers 4254, Institute for the Study of Labor (IZA).
  11. Meng, Xin, 2007. "Wealth Accumulation and Distribution in Urban China," IZA Discussion Papers 2553, Institute for the Study of Labor (IZA).

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