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The Limits Of Career Concerns In Federalism: Evidence From China

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  • Petra Persson
  • Ekaterina Zhuravskaya

Abstract

Performance-based promotion schemes in administrative hierarchies have limitations. Chinese provincial leaders, despite facing strong career concerns, make different policy decisions depending on their career backgrounds. Provincial party secretaries who rose from low to high positions within the province they govern ("locals") spend a higher share of budgetary resources on education and health care and invest less in construction infrastructure than party secretaries who made their most significant career advancements in other provinces ("outsiders"). Identification comes from variation in central leadership and term limits. As the promotion mechanism rewards infrastructure investments, locals are less likely to be promoted at the end of the term. We explore various mechanisms and provide evidence that the difference between locals and outsiders is not driven by knowledge or experience. Several pieces of evidence suggest that locals cater to low-level provincial elites, who helped them rise to power. Thus, local career trajectories limit the power of career concerns by fostering competing allegiances.
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Suggested Citation

  • Petra Persson & Ekaterina Zhuravskaya, 2016. "The Limits Of Career Concerns In Federalism: Evidence From China," Journal of the European Economic Association, European Economic Association, vol. 14(2), pages 338-374, April.
  • Handle: RePEc:bla:jeurec:v:14:y:2016:i:2:p:338-374
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    File URL: http://hdl.handle.net/10.1111/jeea.2016.14.issue-2
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    Cited by:

    1. Suárez Serrato, Juan Carlos & Wang, Xiao Yu & Zhang, Shuang, 2019. "The limits of meritocracy: Screening bureaucrats under imperfect verifiability," Journal of Development Economics, Elsevier, vol. 140(C), pages 223-241.
    2. Wang, Li & Menkhoff, Lukas & Schröder, Michael & Xu, Xian, 2019. "Politicians’ promotion incentives and bank risk exposure in China," Journal of Banking & Finance, Elsevier, vol. 99(C), pages 63-94.
    3. Mercier, Marion, 2016. "The return of the prodigy son: Do return migrants make better leaders?," Journal of Development Economics, Elsevier, vol. 122(C), pages 76-91.
    4. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
    5. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
    6. Li Wang & Lukas Menkhoff & Michael Schröder & Xian Xu, 2018. "Politicians' Promotion Incentives and Bank Risk Exposure," Discussion Papers of DIW Berlin 1771, DIW Berlin, German Institute for Economic Research.
    7. Sergei Guriev, 2019. "Gorbachev versus Deng: A Review of Chris Miller's The Struggle to Save the Soviet Economy," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 120-146, March.
    8. Gerard Roland, 2018. "The evolution of post‐communist systems : Eastern Europe vs. China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(4), pages 589-614, October.
    9. Jiankun LU & Pi-Han Tsai, 2017. "Signal and Political Accountability: Environmental Petitions in China," Economic Growth Centre Working Paper Series 1711, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    10. Pi‐han Tsai & Jianliang Ye, 2018. "The Lame‐Duck Effect and Fiscal Policy in China," The Developing Economies, Institute of Developing Economies, vol. 56(3), pages 197-220, September.
    11. Hanming Fang & Linke Hou & Mingxing Liu & Lixin Colin Xu & Pengfei Zhang, 2019. "Factions, Local Accountability, and Long-Term Development: Theory and Evidence," PIER Working Paper Archive 19-009, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    12. Jiankun Lu & Pi-Han Tsai, 2017. "Signal and political accountability: environmental petitions in China," Economics of Governance, Springer, vol. 18(4), pages 391-418, November.
    13. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
    14. Thomas Stoerk, 2017. "Compliance, Efficiency and Instrument Choice: Evidence from air pollution control in China," GRI Working Papers 273, Grantham Research Institute on Climate Change and the Environment.
    15. Deng, Yuping & Wu, Yanrui & Xu, Helian, 2019. "Political turnover and firm pollution discharges: An empirical study," China Economic Review, Elsevier, vol. 58(C).
    16. Chen, Ting & Kung, J.K.-S., 2016. "Do land revenue windfalls create a political resource curse? Evidence from China," Journal of Development Economics, Elsevier, vol. 123(C), pages 86-106.
    17. Pranab Bardhan, 2016. "State and Development: The Need for a Reappraisal of the Current Literature," Journal of Economic Literature, American Economic Association, vol. 54(3), pages 862-892, September.
    18. Antoinette Schoar, 2019. "Comment on "Special Deals with Chinese Characteristics "," NBER Chapters, in: NBER Macroeconomics Annual 2019, volume 34, pages 389-394, National Bureau of Economic Research, Inc.
    19. , Stone Center & Yang, Li & Novokmet, Filip & Milanovic, Branko, 2020. "From Workers to Capitalists in Less Than Two Generations: A Study of Chinese Urban Elite Transformation Between 1988 and 2013," SocArXiv enbxv, Center for Open Science.
    20. Kong, Dongmin & Liu, Shasha & Xiang, Junyi, 2018. "Political promotion and labor investment efficiency," China Economic Review, Elsevier, vol. 50(C), pages 273-293.

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    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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