Working Paper: NBER ID: w25925
Authors: Filipe R. Campante; Davin Chor; Bingjing Li
Abstract: We study how adverse economic shocks influence political outcomes in authoritarian regimes in strong states, by examining the 2013-2015 export slowdown in China. We exploit detailed customs data and the variation they reveal about Chinese prefectures’ underlying exposure to the global trade slowdown, in order to implement a shift-share instrumental variables strategy. Prefectures that experienced a more severe export slowdown witnessed a significant increase in incidents of labor strikes. This was accompanied by a heightened emphasis in such prefectures on upholding domestic stability, as evidenced from: (i) textual analysis measures we constructed from official annual work reports using machine-learning algorithms; and (ii) data we gathered on local fiscal expenditures channelled towards public security uses and social spending. The central government was subsequently more likely to replace the party secretary in prefectures that saw a high level of “excess strikes”, above what could be predicted from the observed export slowdown, suggesting that local leaders were held to account on yardsticks related to political stability.
Keywords: China; Export Slowdown; Labor Strikes; Political Economy; Authoritarian Regimes
JEL Codes: D73; D74; F10; F14; F16; H10; J52; P26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| export slowdown (F17) | labor strikes (J52) |
| export slowdown (F17) | wage arrears (J31) |
| labor strikes (J52) | political responses (D72) |
| labor strikes (J52) | replacement of local party secretaries (P31) |
| export slowdown (F17) | public security and social spending (H56) |