Does Setting Performance Targets Work in Bureaucracies? Evidence from China's Great Leap Forward
53 Pages Posted: 27 Nov 2017 Last revised: 20 May 2019
Date Written: May 18, 2019
This paper explores whether setting performance targets works in bureaucracies using the case of Mao Zedong’s grain yield targets in 1958-1961. Mao wishfully set targets for Chinese counties according to their geographic locations, incentivizing local officials to over-report grain output and excessively extract food from farmers. Using novel county-level data combined with a spatial regression discontinuity strategy, we find that the targets led to excess death tolls in China’s Great Famine. Further investigation suggests that the famine is a root cause of China’s current regional human capital disparity. We highlight the distortionary effects of setting performance targets in bureaucracies.
Keywords: China’s Great Famine, Performance Target, Spatial Regression Discontinuity, Long-Term Effect
JEL Classification: O21, P26, Q18
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