Distributional Consequences of Leader Turnover: Evidence from China’s Public Procurement

Abstract

This article examines how unpredictable leadership turnover influences the distribution of public goods, using novel data from China’s municipal procurement and mayoral career records. We find that new mayors often award more and larger contracts to companies from their previous positions, driven by uncertainty and informational advantages. Such favoritism is more pronounced when mayors are susceptible to influence by local businesses in previous locations but decreases as mayors gain familiarity with their new positions. Over time, preference shifts from firms in a mayor’s last city to those in the current city, indicating a tenure-related adaptation. However, this favoritism raises the risk of corruption, even though favored firms are typically more competent. This study sheds light on the dynamics of distributive bias and the implications of leadership turnover in nondemocracies.

Keywords: political turnover; public procurement; distributive favoritism; Chinese mayors