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Does grassroots democracy reduce income inequality in China?

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  • Shen, Yan
  • Yao, Yang

Abstract

Using village and household survey data collected from 48 villages of eight Chinese provinces for the period 1986-2002, this paper studies how the introduction of village elections affects income distribution at the village level. We estimate both a static fixed-effect panel model and a dynamic panel model for the within-village Gini coefficient and take care of the endogeneity of the introduction of elections. The dynamic panel model shows that having elections reduces the Gini coefficient by 0.04, or 14.3% of the sample average. We also find that elections tend to increase the income shares of poorer portions of the population. Further econometric analysis based on dynamic panel models shows that elections increase per-capita public expenditures by 271 Yuan, but do not increase the level or progressiveness of net or total income transfer in a village. Therefore, elections' positive role in reducing income inequality is not played through more income redistribution, but through more pro-poor public investment.

Suggested Citation

  • Shen, Yan & Yao, Yang, 2008. "Does grassroots democracy reduce income inequality in China?," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2182-2198, October.
  • Handle: RePEc:eee:pubeco:v:92:y:2008:i:10-11:p:2182-2198
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    Cited by:

    1. Yang Yao & Nancy Qia & Monica Martinez Bravo & Gerard Padro i Miquel, 2011. "Do Local Elections in Non-Democracies Increase Accountability? Evidence from Rural China," Working Papers id:3931, eSocialSciences.
    2. repec:eee:pubeco:v:152:y:2017:i:c:p:119-132 is not listed on IDEAS
    3. Shun Wang, 2010. "Social Capital, Local Government, and the Management of Irrigation Systems in Northwest China," EEPSEA Research Report rr2010122, Economy and Environment Program for Southeast Asia (EEPSEA), revised Dec 2010.
    4. Baeten, Steef & Van Ourti, Tom & van Doorslaer, Eddy, 2013. "Rising inequalities in income and health in China: Who is left behind?," Journal of Health Economics, Elsevier, vol. 32(6), pages 1214-1229.
    5. Kanbur, Ravi & Wang, Yue & Zhang, Xiaobo, 2017. "The Great Chinese Inequality Turnaround," IZA Discussion Papers 10635, Institute for the Study of Labor (IZA).
    6. Tao, Ran & Su, Fubing & Sun, Xin & Lu, Xi, 2011. "Political trust as rational belief: Evidence from Chinese village elections," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 108-121, March.
    7. Martinez-Bravo, Monica & Padr� i Miquel, Gerard & Qian, Nancy & Yao, Yan, 2017. "The Rise and Fall of Local Elections in China: Theory and Empirical Evidence on the Autocrat's Trade-off," CEPR Discussion Papers 12439, C.E.P.R. Discussion Papers.
    8. Junxue Jia & Cong Qin & Yongzheng Liu, 2017. "Do Community-Based Development Projects Alleviate Poverty? Evidence from Rural China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1722, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. Deininger, Klaus & Jin, Songqing, 2009. "Securing property rights in transition: Lessons from implementation of China's rural land contracting law," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 22-38, May.
    10. Mu, Ren & Zhang, Xiaobo, 2014. "Do elected leaders in a limited democracy have real power? Evidence from rural China," Journal of Development Economics, Elsevier, vol. 107(C), pages 17-27.
    11. James Alm & Yongzheng Liu, 2014. "China's Tax-for-Fee Reform and Village Inequality," Oxford Development Studies, Taylor & Francis Journals, vol. 42(1), pages 38-64, March.
    12. Hoken, Hisatoshi, 2016. "Participation in farmer's cooperatives and its effects on agricultural incomes : evidence from vegetable-producing areas in China," IDE Discussion Papers 578, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    13. Chen, Xi & Zhang, Xiaobo, 2009. "The Distribution of Income and Well-Being in Rural China: A Survey of Panel Data Sets, Studies and New Directions," MPRA Paper 20587, University Library of Munich, Germany.
    14. Ansgar Belke & Andreas Wernet, 2015. "Poverty Reduction through Growth and Redistribution Policies—a Panel Analysis for 59 Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 19(1), pages 143-162, February.
    15. Wang, Xiaxin & Shen, Yan, 2014. "The effect of China's agricultural tax abolition on rural families' incomes and production," China Economic Review, Elsevier, vol. 29(C), pages 185-199.
    16. Martinez-Bravo, Monica & Padro, Gerard & Qian, Nancy & Yao, Yang, 2012. "The Effects of Democratization on Public Goods and Redistribution: Evidence from China," CEPR Discussion Papers 8975, C.E.P.R. Discussion Papers.
    17. Guojun He & Shaoda Wang, 2016. "Do College Graduates Serving as Village Officials Help Rural China?," HKUST IEMS Working Paper Series 2016-39, HKUST Institute for Emerging Market Studies, revised Nov 2016.
    18. Mu, Ren & Zhang, Xiaobo, 2011. "The role of elected and appointed village leaders in the allocation of public resources: Evidence from a low-income region in China," IFPRI discussion papers 1061, International Food Policy Research Institute (IFPRI).
    19. Min Qin & James Brown & Sabu Padmadas & Li Bohua & Qi Jianan & Jane Falkingham, 2016. "Gender Inequalities in Employment and Wage-earning among Economic Migrants in Chinese Cities," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 34(6), pages 175-202, January.
    20. Sun, Chuanwang & Zhang, Yifan & Peng, Shuijun & Zhang, Wencheng, 2015. "The inequalities of public utility products in China: From the perspective of the Atkinson index," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 751-760.
    21. Li Han, 2014. "Are elections in autocracies a curse for incumbents? Evidence from Chinese villages," Public Choice, Springer, vol. 158(1), pages 221-242, January.
    22. Zhang, Jing & Gan, Li & Xu, Lixin Colin & Yao, Yang, 2014. "Health shocks, village elections, and household income: Evidence from rural China," China Economic Review, Elsevier, vol. 30(C), pages 155-168.
    23. Ogundari, Kolawole & Awokuse, Titus, 2016. "Assessing the Contribution of Agricultural Productivity to Food Security levels in Sub-Saharan African countries," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235730, Agricultural and Applied Economics Association.

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