Strong State, Weak Enforcement: Bureaucratic Forbearance of China's Social Insurance Policies *

55 Pages Posted: 1 Aug 2023 Last revised: 20 Aug 2024

See all articles by Hao Zhang

Hao Zhang

Princeton University

Ye Zhang

Department of Political Science, MIT

Date Written: July 31, 2023

Abstract

Why would a strong authoritarian state choose not to enforce its own policy? We extend the theory of forbearance to the authoritarian context and highlight different incentives and characteristics of forbearance. In the context of China's modern social insurance system, we argue that local officials have career incentives to allow firms to evade insurance taxes. Specifically, promotion-seeking local officials under severe interjurisdictional competitions tend to forgo firms' social insurance payments in the hope of better economic performance and career prospects. These effects of officials' promotional pressure on social insurance forbearance are most significant among domestic private firms and foreign firms. We conduct the first systematic analysis of firm-level social insurance contributions in an authoritarian context and offer additional evidence from individual-level survey data. Our paper shows that bureaucratic forbearance of China's social insurance policies has a pro-business bias, which undermined the policies originally designed to address inequalities during market reforms.

Keywords: forbearance, weak enforcement, social insurance, redistribution, China

Suggested Citation

Zhang, Hao and Zhang, Ye, Strong State, Weak Enforcement: Bureaucratic Forbearance of China's Social Insurance Policies * (July 31, 2023). Available at SSRN: https://ssrn.com/abstract=4527225 or http://dx.doi.org/10.2139/ssrn.4527225

Hao Zhang (Contact Author)

Princeton University ( email )

Princeton, NJ 08540
United States
6173356101 (Phone)

HOME PAGE: http://haocharliezhang.com

Ye Zhang

Department of Political Science, MIT ( email )

30 Wadsworth Street (Rm 470)
Cambridge, MA 02142
United States

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