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Politics, growth, and inequality in rural China: does it pay to join the Party?

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  • Morduch, Jonathan
  • Sicular, Terry

Abstract

Economic reform is difficult to carry out because it often undercuts the status and economic advantage of the rank-and-file officials to whom authorities must turn to implement market-based changes. Drawing on new longitudinal data collected between 1991 and 1994 in a representative rural county in Northern China, we demonstrate that local officials have not in fact lost out. To the contrary, their incomes have risen and political rents have increased during a period when reforms accelerated. The data suggest that political rents have stemmed largely from control over and access to new wage jobs and collective land that allows high-value agricultural production. The benefits to joining the Communist Party are largely indirect and occur through increasing the probability of becoming an official with such access. This access functions as an implicit performance-based incentive contract that ties the household incomes of officials to increases in consumer demand and the provision of public goods. Political rents are for now tolerated by a population that is sharing fairly equitably in the fruits of growth, allowing implementation of this "win-win" reform process.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 77 (2000)
Issue (Month): 3 (September)
Pages: 331-356

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Handle: RePEc:eee:pubeco:v:77:y:2000:i:3:p:331-356

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Web page: http://www.elsevier.com/locate/inca/505578

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  1. David D. Li, 1996. "A Theory of Ambiguous Property Rights in Transition Economies: The Case of the Chinese Non-State Sector," William Davidson Institute Working Papers Series 8, William Davidson Institute at the University of Michigan.
  2. Li, David D., 1996. "A Theory of Ambiguous Property Rights in Transition Economies: The Case of the Chinese Non-State Sector," Journal of Comparative Economics, Elsevier, vol. 23(1), pages 1-19, August.
  3. Hare, Denise, 1994. "Rural nonagricultural activities and their impact on the distribution of income: Evidence from farm households in Southern China," China Economic Review, Elsevier, vol. 5(1), pages 59-82.
  4. Frye, Timothy & Shleifer, Andrei, 1997. "The Invisible Hand and the Grabbing Hand," American Economic Review, American Economic Association, vol. 87(2), pages 354-58, May.
  5. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
  6. Jiahua Che & Yingyi Qian, . "Insecure Property Rights and Government Ownership of Firms," Working Papers 97050, Stanford University, Department of Economics.
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