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Does It Pay to Be a Cadre? Estimating the Returns to Being a Local Official in Rural China

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Author Info

  • Zhang, Jian

    ()
    (Central University of Finance and Economics)

  • Giles, John T.

    ()
    (World Bank)

  • Rozelle, Scott

    ()
    (Stanford University)

Abstract

Recruiting and retaining leaders and public servants at the grass-roots level in developing countries creates a potential tension between providing sufficient returns to attract talent and limiting the scope for excessive rent-seeking behavior. In China, researchers have frequently argued that village cadres, who are the lowest level of administrators in rural areas, exploit personal political status for economic gain. Much existing research, however, compares the earnings of cadre and non-cadre households in rural China without controlling for unobserved dimensions of ability that are also correlated with success as entrepreneurs or in non-agricultural activities. The findings of this paper suggest a measurable return to cadre status, but the magnitudes are not large and provide only a modest incentive to participate in village-level government. The paper does not find evidence that households of village cadres earn significant rents from having a family member who is a cadre. Given the increasing returns to non-agricultural employment since China‘s economic reforms began, it is not surprising that the returns to working as a village cadre have also increased over time. Returns to cadre-status are derived both from direct compensation and subsidies for cadres and indirectly through returns earned in off-farm employment from businesses and economic activities managed by villages.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6653.

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Length: 63 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6653

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Keywords: village political economy; public sector labor markets; returns to political status; rural China;

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References

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  1. Benjamin, Dwayne & Brandt, Loren & Giles, John, 2010. "Did higher inequality impede growth in rural China ?," Policy Research Working Paper Series 5483, The World Bank.
  2. Joshua D. Angrist, 2000. "Estimation of Limited-Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," NBER Technical Working Papers 0248, National Bureau of Economic Research, Inc.
  3. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
  4. Giles, John, 2006. "Is life more risky in the open? Household risk-coping and the opening of China's labor markets," Journal of Development Economics, Elsevier, vol. 81(1), pages 25-60, October.
  5. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  6. Morduch, Jonathan & Sicular, Terry, 2000. "Politics, growth, and inequality in rural China: does it pay to join the Party?," Journal of Public Economics, Elsevier, vol. 77(3), pages 331-356, September.
  7. de Brauw, Alan & Giles, John, 2008. "Migrant Labor Markets and the Welfare of Rural Households in the Developing World: Evidence from China," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6085, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Hongbin Li & PakWai Liu & Junsen Zhang & Ning Ma, 2007. "Economic Returns to Communist Party Membership: Evidence From Urban Chinese Twins," Economic Journal, Royal Economic Society, vol. 117(523), pages 1504-1520, October.
  9. Alan de Brauw & John Giles, 2005. "Migrant Opportunity and the Educational Attainment of Youth in Rural China," Department of Economics Working Papers 2005-05, Department of Economics, Williams College.
  10. de Brauw, Alan & Huang, Jikun & Rozelle, Scott & Zhang, Linxiu & Zhang, Yigang, 2002. "The Evolution of China's Rural Labor Markets During the Reforms," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 329-353, June.
  11. Markus Goldstein & Christopher Udry, 2005. "The Profits of Power: Land Rights and Agricultural Investment in Ghana," Working Papers 929, Economic Growth Center, Yale University.
  12. Benjamin, Dwayne & Brandt, Loren & Giles, John, 2005. "The Evolution of Income Inequality in Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 53(4), pages 769-824, July.
  13. Hongbin Li & Scott Rozelle, 2003. "Privatizing Rural China: Insider Privatization, Innovative Contracts, and the Performance of Township Enterprises1," Discussion Papers 00001, Chinese University of Hong Kong, Department of Economics.
  14. Lixin Colin Xu, 2000. "Control, Incentives and Competition: The Impact of Reform on Chinese State-owned Enterprises," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 151-173, March.
  15. William L. Parish & Xiaoye Zhe & Fang Li, . "Nonfarm Work and Marketization of the Chinese Countryside," University of Chicago - Population Research Center 95-6, Chicago - Population Research Center.
  16. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
  17. Albert Park & Scott Rozelle, 1998. "Reforming state-market relations in rural China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(2), pages 461-480, November.
  18. John Giles & Kyeongwon Yoo, 2007. "Precautionary Behavior, Migrant Networks, and Household Consumption Decisions: An Empirical Analysis Using Household Panel Data from Rural China," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 534-551, August.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. All Politics Might Be Local, but the Returns to Local Politics Are Frugal
    by Marc F. Bellemare in Marc F. Bellemare on 2012-07-12 09:00:42

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