Do Land Revenue Windfalls Reduce the Career Incentives of County Leaders? Evidence from China

59 Pages Posted: 9 Jul 2013 Last revised: 8 Aug 2013

See all articles by James Kai-Sing Kung

James Kai-Sing Kung

The University of Hong Kong - Faculty of Business and Economics

Ting Chen

Hong Kong University of Science & Technology (HKUST)

Date Written: July 29, 2013

Abstract

We analyze a dataset constructed on the political turnovers of 3,623 county leaders in China during 1999-2008, and find that their career incentives — the institutional foundations of China’s three decades of sustained economic growth — remain powerful. This is in spite of a policy shock that assigns to them the residual claiming rights over land revenues and their having substantially more discretionary revenue to spend as a result. Specifically, the county leaders spend significantly more to signal their achievements (for promotion), and on a variety of activities that benefit mostly the government bureaucracy, than on projects that enhance social welfare.

Keywords: Career Incentives, Land Revenue, Local Leaders, Signaling, China

JEL Classification: H11, H70, J63, P26

Suggested Citation

Kung, James Kai-Sing and Chen, Ting, Do Land Revenue Windfalls Reduce the Career Incentives of County Leaders? Evidence from China (July 29, 2013). Available at SSRN: https://ssrn.com/abstract=2291081 or http://dx.doi.org/10.2139/ssrn.2291081

James Kai-Sing Kung

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Ting Chen (Contact Author)

Hong Kong University of Science & Technology (HKUST) ( email )

999999

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