A Privilege of the Rich? A Duality of Unequal Government Responsiveness in Urban China

Abstract

Does wealth inequality affect government responsiveness in authoritarian countries with no meaningful representation through which the affluent can influence politics? We address this question by unveiling the implicit privilege of the rich. We first develop a formal model to show how credible signals from the rich and misaligned interests in governments lead to the duality of unequal responsiveness: Although bureaucrats effectively respond to petitions from the poor, they place priority on the petitions by the rich. We empirically document this duality by matching unique data on municipal service records and apartment-complex-level housing prices in downtown Shanghai. Using 2SLS estimation and spatial RD design that explores the historical boundary of the foreign settlement, we show that the local government prioritizes petitions by residents living in more expensive areas. Consistent with the theory, we show no discrimination against the poor in petition resolution. This study highlights the unequal responsiveness in authoritarian regimes.

Keywords: Government Responsiveness, Bureaucracy, Duality, Housing Price, Authoritarianism, China