Does Flattening Government Improve Economic Performance?

32 Pages Posted: 2 Aug 2015

See all articles by Pei Li

Pei Li

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE)

Yi Lu

National University of Singapore (NUS)

Jin Wang

Hong Kong University of Science & Technology (HKUST)

Date Written: August 1, 2015

Abstract

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

Li, Pei and Lu, Yi and Wang, Jin, Does Flattening Government Improve Economic Performance? (August 1, 2015). Available at SSRN: https://ssrn.com/abstract=2638647 or http://dx.doi.org/10.2139/ssrn.2638647

Pei Li (Contact Author)

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 10246
China

Yi Lu

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

Jin Wang

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

Clearwater Bay
Kowloon, 999999
Hong Kong

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