Incentivizing Corruption: An Unintended Consequence of Bureaucratic Promotions in China
35 Pages Posted: 21 Jul 2019
Date Written: June 21, 2019
Conventional wisdom holds that in non-democracies, a strong central state can reward and punish local administrations through a merit-based promotion system, which should restrain officials’ “grabbing hand”. But much evidence shows rampant corruption in countries with a powerful central government. This study argues that merit-based promotions can be compromised by three disincentives: factional politics at upper-level administrations, a lack of serious punishments for wrong-doing, and difficulties in evaluating officials’ performance, each of which is common in non-democracies. As a result, promotions could incentivize corruption. Using a fuzzy regression discontinuity design exploiting exogenous variations in officials’ promotion incentive from a mandatory age cutoff for promotion, combined with a biographical database of prefecture party secretaries and novel measures of corruption, I find that promotions encourage corruption in China. Moreover, prefecture party secretaries are more corrupt if their provincial superiors are connected to central factions, suggesting that upper-level factionalism is one of the disincentives that breaks down lower-level meritocracy.
Keywords: corruption, promotion, bribe, meritocracy, factionalism
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