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Economic Returns to Communist Party Membership: Evidence from Chinese Twins

Author

Listed:
  • Hongbin Li
  • Pak Wai Liu
  • Ning Ma
  • Junsen Zhang

Abstract

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.

Suggested Citation

  • Hongbin Li & Pak Wai Liu & Ning Ma & Junsen Zhang, 2005. "Economic Returns to Communist Party Membership: Evidence from Chinese Twins," Discussion Papers 00015, Chinese University of Hong Kong, Department of Economics.
  • Handle: RePEc:chk:cuhkdc:00015
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    File URL: http://www.econ.cuhk.edu.hk/~discusspaper/00015.pdf
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    Cited by:

    1. Shuang LI & Ming LU & Hiroshi Sato, 2008. "The Value of Power in China: How Do Party Membership and Social Networks Affect Pay in Different Ownership Sectors?," Global COE Hi-Stat Discussion Paper Series gd08-011, Institute of Economic Research, Hitotsubashi University.
    2. Appleton, Simon & Song, Lina & Xia, Qingjie, 2014. "Understanding Urban Wage Inequality in China 1988–2008: Evidence from Quantile Analysis," World Development, Elsevier, vol. 62(C), pages 1-13.
    3. Simon Appleton & John Knight & Lina Song & Qingjie Xia, 2009. "The Economics of Communist Party Membership: The Curious Case of Rising Numbers and Wage Premium during China's Transition," Journal of Development Studies, Taylor & Francis Journals, vol. 45(2), pages 256-275.
    4. 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).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, 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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