Working Paper: NBER ID: w20317
Authors: Hanming Fang; Quanlin Gu; Lian Zhou
Abstract: Using a large, unique dataset on the Chinese housing market, we propose to measure corruption using the price differences paid by bureaucrat buyers and non-bureaucrat buyers in the housing market. We find that the housing price paid by bureaucrat buyers is on average 1.05 percentage points lower than non-bureaucrat buyers, after controlling for a full set of characteristics of buyers, houses and mortgage loans. More interestingly, we find that the bureaucrat price discounts exhibit interesting gradients with respect to their hierarchical ranks, the criticality of their government agencies to real estate developers, and geography. We argue that the bureaucrat price discounts and the gradients of these discounts are unlikely to be driven by alternative explanations, thus they are evidence of corruption and measures of the market value of government power.
Keywords: No keywords provided
JEL Codes: D73; H1; O18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Bureaucrat status (D73) | Price discounts (L42) |
| Bureaucratic rank (D73) | Price discounts (L42) |
| Agency criticality (D82) | Price discounts (L42) |
| Bureaucrat jurisdiction (D73) | Price discounts (L42) |