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The Wage Premium of Communist Party Membership: Evidence from China

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  • Wang, Hongjian

    (State University of New York)

  • Nikolov, Plamen

    (State University of New York)

  • Acker, Kevin

    (The Johns Hopkins University School of Advanced International Studies and The Hopkins-Nanjing Center)

Abstract

Social status and political connections may confer large economic benefits on an individual. Previous studies focused on China have examined the relationship between Communist Party membership and earnings and found a positive correlation. However, the correlation could be partly or totally spurious. Using data from three surveys spanning three decades, we estimate the causal effect of Chinese Communist Party membership on monthly earnings in China. We find that, on average, membership in the Communist Party of China increases monthly earnings and the wage premium has grown in recent years. We explore potential causes and discover evidence that improvements in social networks and social rank, acquisition of job-related qualifications, and greater life satisfaction likely play important roles in increased earnings.

Suggested Citation

  • Wang, Hongjian & Nikolov, Plamen & Acker, Kevin, 2019. "The Wage Premium of Communist Party Membership: Evidence from China," IZA Discussion Papers 12874, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12874
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    Cited by:

    1. Xinxin Ma & Ichiro Iwasaki, 2021. "Does communist party membership bring a wage premium in China? a meta-analysis," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 19(1), pages 55-94, January.

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    More about this item

    Keywords

    China; political status; wage premium; Communist Party;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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