Does Flattening Government Improve Economic Performance?
32 Pages Posted: 2 Aug 2015
Date Written: August 1, 2015
In this paper, we examine a causal relationship between flattening of a government hierarchy and economic performance. Exploiting a novel panel dataset on government reorganization in China from 1999 to 2012, we find that delayering has led to increases in revenue and inter-govermental transfers for county governments. However, the associated enlarged span of control of the upper-level governments, has led to a reduction in county government's total public expenditure and pro-growth expenditure. Overall, the flattening of the government hierarchy has a negative effect on economic performance.
Keywords: Flattening; Government; Hierarchies; Organization structures; PMC
JEL Classification: H11, O12
Suggested Citation: Suggested Citation