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A model of tournament incentives with corruption

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  • Wang, Bin
  • Zheng, Yu

Abstract

The institution that has enabled decades of rapid economic growth in China features lower-level government officials competing for promotion to a higher level by promoting local economic growth. Theoretically, this tournament-style promotion scheme calls for a convex wage scale to effectively elicit effort. However, the empirically observed public-sector pay scale is rather concave in China. We reconcile the theoretical prediction on the wage progressivity with its empirical counterpart by recognizing other implicit forms of incentives of rising to the top made possible by another institutional feature of China: the top-down disciplinary inspection.

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  • Wang, Bin & Zheng, Yu, 2020. "A model of tournament incentives with corruption," Journal of Comparative Economics, Elsevier, vol. 48(1), pages 182-197.
    • Handle: RePEc:eee:jcecon:v:48:y:2020:i:1:p:182-197
    DOI: 10.1016/j.jce.2019.09.003
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    Cited by:

    1. Zheng, Bingyong & Xiao, Junji, 2020. "Corruption and Investment: Theory and Evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 175(C), pages 40-54.
    2. Wenzhou Li & Liang Chen & Pengfei Sheng, 2022. "The tone from above: Does tunnelling by ultimate owners impinge on the relations between managerial compensation and earnings management?," Australian Economic Papers, Wiley Blackwell, vol. 61(4), pages 825-847, December.

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    More about this item

    Keywords

    Institution; Tournament; Corruption; China;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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