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The Distortionary Effects of Incentives in Government: Evidence from China's “Death Ceiling” Program

Listed author(s):
  • Raymond Fisman
  • Yongxiang Wang

We study a 2004 program designed to motivate Chinese bureaucrats to reduce accidental deaths. Each province received a set of ‘death ceilings’ that, if exceeded, would impede government officials' promotions. For each category of accidental deaths, we observe a sharp discontinuity in reported deaths at the ceiling, suggestive of manipulation. Provinces with safety incentives for municipal officials experienced larger declines in accidental deaths, suggesting complementarities between incentives at different levels of government. While realized accidental deaths predict the following year's ceiling, we observe no evidence that provinces manipulate deaths upward to avoid ratchet effects in the setting of death ceilings.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23098.

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Date of creation: Jan 2017
Handle: RePEc:nbr:nberwo:23098
Note: DEV LE POL
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  1. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
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  8. Baker, G.P. & Jensen, M.C. & Murphy, K.J., 1988. "Compensation And Incentives: Practice Vs. Theory," Papers 88-05, Rochester, Business - Managerial Economics Research Center.
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