Working Paper: CEPR ID: DP10397
Authors: 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.
Keywords: Autocracy; Career Concerns; China; Federalism; Hierarchies; Public Goods
JEL Codes: H11; H70; P26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| local party secretaries (P31) | higher share of provincial expenditure to education and health care (H75) |
| higher share of provincial expenditure to education and health care (H75) | increased public goods provision (H49) |
| outsider party secretaries (D73) | greater construction output (L74) |
| career backgrounds of secretaries (J45) | differences in policy choices (D72) |
| local party secretaries (P31) | less likely to be promoted than outsiders (J62) |
| connections locals form during careers (J62) | influence policy decisions (D78) |
| local ties (H73) | limit effectiveness of career concerns in promoting optimal governance outcomes (D73) |