This paper empirically estimates the returns to membership of the Chinese Communist Party using unique twins data that the authors collected from urban China. Our ordinary least squares estimate shows that being a Party member increases earnings by 28.1 percent, but when we use a within-twin-pair fixed-effects model, the effect of Party membership all but disappears, which suggests that much of the estimated value of Party membership that is given in the literature is due to the effects of omitted ability or family background. The findings suggest that Party members fare well not because of their special political status per se, but because of the superior ability that allowed them to pass through the strict Party membership selection process.
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Paper provided by Chinese University of Hong Kong, Department of Economics in its series Discussion Papers with number
00015.
Length: Date of creation: Aug 2005 Date of revision: Handle: RePEc:chk:cuhkdc:00015
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Find related papers by JEL classification: J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
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