Centralization and Regulatory Enforcement: Evidence from Personnel Authority Reform in China

Journal of Public Economics, Conditionally accepted

67 Pages Posted: 29 Nov 2023

See all articles by Dongmin Kong

Dongmin Kong

School of Economics, Huazhong University of Science and Technology

Chenhao Liu

Peking University - Guanghua School of Management

Date Written: November 10, 2023

Abstract

This paper examines the impacts of the centralization of authority in the appointment of civil servants on the effectiveness of regulatory enforcement efforts. We exploit a unique personnel reform in China's Environmental Protection Bureaus (EPBs), which shifts the power to appoint local EPB directors from municipal governments to the provincial level. Based on detailed personnel records and administrative punishment data, we find that local EPB directors under centralized personnel authority increase the number of punishments and the total amount of fines by 13.0% and 19.0%, respectively. The impact on environmental enforcement remains of comparable magnitude even after 3 years, resulting in improved environmental quality. We identify three possible mechanisms driving this positive effect: the reduction of distorted incentives, the enforcement of objectives with interjurisdictional externalities, and the selection of more qualified appointees. Our analysis contributes to the understanding of the consequences of the recent trend toward ``reverse decentralization'' in institutional settings.

Keywords: Centralization, Appointment Authority, Environmental Enforcement.

JEL Classification: D73, H75, O13, Q58.

Suggested Citation

Kong, Dongmin and Liu, Chenhao, Centralization and Regulatory Enforcement: Evidence from Personnel Authority Reform in China (November 10, 2023). Journal of Public Economics, Conditionally accepted, Available at SSRN: https://ssrn.com/abstract=4629693

Dongmin Kong (Contact Author)

School of Economics, Huazhong University of Science and Technology ( email )

Bldg. of Econ. School, Louyu Rd. 1037#
HUST, Hongshan Dist.
Wuhan, Hubei 430074
China

Chenhao Liu

Peking University - Guanghua School of Management ( email )

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