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

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Author Info
Hongbin Li () (Chinese University of Hong Kong)
Pak Wai Liu () (Chinese University of Hong Kong)
Junsen Zhang () (Chinese University of Hong Kong and IZA Bonn)
Ning Ma () (Johns Hopkins University)

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Abstract

This paper estimates the returns to membership of the Chinese Communist Party using unique twins data we collected from China. Our OLS estimate shows that being a Party member increases earnings by 10%, but the within-twin-pair estimate becomes zero. One interpretation of these results is that the OLS Party premium is due to omitted ability and family background. This interpretation would suggest that Party members fare well not because of their special political status per se, but because of the superior ability that made them Party members. The estimates are also consistent with an alternative interpretation that Party membership not only has its own effect but also has an external effect on the sibling.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2118.

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Length: 28 pages
Date of creation: May 2006
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Handle: RePEc:iza:izadps:dp2118

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Related research
Keywords: twins; communist party membership; China;

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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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March. [Downloadable!]
  2. Neumark, David, 1999. "Biases in twin estimates of the return to schooling," Economics of Education Review, Elsevier, vol. 18(2), pages 143-148, April. [Downloadable!] (restricted)
  3. Bound, John & Solon, Gary, 1999. "Double trouble: on the value of twins-based estimation of the return to schooling," Economics of Education Review, Elsevier, vol. 18(2), pages 169-182, April. [Downloadable!] (restricted)
    Other versions:
  4. Agrawal, Anup & Knoeber, Charles R, 2001. "Do Some Outside Directors Play a Political Role?," Journal of Law & Economics, University of Chicago Press, vol. 44(1), pages 179-98, April.
  5. Hongbin Li & Lingsheng Meng & Junsen Zhang, 2006. "Why Do Entrepreneurs Enter Politics? Evidence from China," Economic Inquiry, Oxford University Press, vol. 44(3), pages 559-578, July. [Downloadable!] (restricted)
  6. 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. [Downloadable!] (restricted)
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  7. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January. [Downloadable!] (restricted)
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  8. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September. [Downloadable!] (restricted)
  9. Hongbin Li & Lingsheng Meng & Junsen Zhang, 2005. "Why Do Entrepreneurs Enter Politics?," Discussion Papers 00009, Chinese University of Hong Kong, Department of Economics. [Downloadable!]
  10. 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.
  11. Johnson, Simon & Mitton, Todd, 2003. "Cronyism and capital controls: evidence from Malaysia," Journal of Financial Economics, Elsevier, vol. 67(2), pages 351-382, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Appleton, Simon & Knight, John & Song, Lina & Xia, Qingjie, 2008. "The Economics of Communist Party Membership: The Curious Case of Rising Numbers and Wage Premium during China’s Transition," IZA Discussion Papers 3454, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Xin Meng, 2007. "Wealth Accumulation and Distribution in Urban China," IZA Discussion Papers 2553, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. 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. [Downloadable!]
    Other versions:
  4. 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. [Downloadable!]
  5. 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). [Downloadable!]
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