Abstract
The career prospects of politicians are crucial determinants of their policy choices. This paper studies the impact of promotion incentives on policy choices by analyzing data on prefecture officials and local land market dynamics in China from 2007 to 2017. Our findings indicate that a decrease in promotion prospects for prefecture party secretaries hampers their motivation to promote economic growth. This results in a decline in industrial land transactions. However, similar patterns are not observed among mayors. Further exploration reveals that officials experiencing a decline in prospects exhibit a negative stance toward economic growth, as evidenced by their annual working reports. This research sheds light on the nuanced relationship between political career incentives and policy outcomes in the context of local land markets.
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Notes
In this paper, the land refers to land in urban area. Land in the rural area for agriculture use is not allowed to be transacted.
China’s CYL acts like the former USSR’s Leninist Youth League and North Korea’s Kim Il-sung Socialist Youth League.
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Appendices
Appendix 1: The grade of officials’ background
The table shows how the levels of officials’ positions in the CYL are graded in this study.
Position | Level | Grade |
|---|---|---|
The First Secretary of the CYL Central Committee | Chief Province-Ministry | 8 |
Standing Secretary of the CYL Central Committee | Vice Province-Ministry | 7 |
Secretary of the CYL Provincial Committee Secretary of the CYL Central Committee Head of one department of the CYL Central Committee | Chief Prefecture-Department | 6 |
Vice Secretary of the CYL Provincial Committee Vice Head of one department of the CYL Central Committee | Vice Prefecture-Department | 5 |
Secretary of the CYL Prefecture Committee Head of one department of the CYL Provincial Committee | Chief County-Section | 4 |
Vice-secretary of the CYL Prefecture Committee Vice-head of one department of the CYL Provincial Committee | Vice County-Section | 3 |
Secretary of a CYL County Committee Head of one department of a CYL Prefecture Committee | Chief Township-Division | 2 |
Vice-secretary of a CYL County Committee Vice-head of one department of a CYL Prefecture Committee | Vice Township-Division | 1 |
Appendix 2: Factors affecting the levels in the CYL bureaucracy
Personal characteristics and regional economic performance normally affect a bureaucrat’s promotion prospects. As a quango, the CYL operates similarly. To examine to what extent an official’s age, working experience in central government, and working experience in a non-hometown local government affect their position in the CYL system, correlations among those variables are quantified. Table
12 shows that they are not highly correlated. Working experience in central and local government is positively related to the CYL level, while age has a negative relationship because the CYL is an organization for “youth.”
Those factors are then regressed against the individuals’ CYL levels with the results shown in Table
13. The first two columns suggest that only age has a significant negative effect on CYL level; working experience is not significant. When the interaction of Post2012 with these factors is added in column (3), the results remain consistent. Age is therefore the key personal factor in deciding CYL levels.
The importance of regional economic performance is investigated using a subset of the data for the year when an official was appointed a prefectural secretary. The regional economic data for that year are regressed against the newly appointed secretary’s CYL level (Table
14). The regression in column (1) shows a negative relationship only for GDP. The interaction of Post2012 with all the control variables is added in column (2), and the results still hold. In columns (3) and (4), regional bank loans and fiscal revenue and their corresponding interaction terms are added. The results still show that only GDP has significant negative and significant effects on CYL levels. These findings suggest that high-level CYL officials are more likely to be assigned to poorly developed regions.
Appendix 3: Complementary role of social ties and economic performance in promotion
Table
15 interacts officials’ CYL backgrounds with their performance in two sub-samples. Promotion is likely to be determined according to an official’s performance during an entire tenure. An official is very unlikely to be promoted based on their local achievements over only one year. The data on secretaries in place for a year or less was therefore dropped. Columns (1) and (2) present the coefficient estimates for the 2007–2012 data. They show that the interaction between CYL level and average GDP growth during tenure is of little significance. By contrast, the results in columns (3) and (4) using the data after 2012 show a significant negative interaction.
Appendix 4: Alternative definition of the CYL background
The definition of an official’s CYL background used so far assumes that a higher position in the CYL means a closer connection of one’s political future with their CYL working experience. To loosen this assumption, a dummy variable is defined simply indicating whether an official had a CYL background at any level. This CYL dummy is then interacted with Post2012 as before. Table 10 reports the results with prefecture-year data in its first two columns. The coefficients with person-level data are shown in the last three columns. In columns (1) and (3), the product of Post2012 and the CYL background dummy has a negative and significant coefficient, consistent with the previous findings. The significance vanishes, however, when the interaction terms are added in columns (2) and (4). In column (5), the key interaction is still significant when the observations of officials without any CYL experience are excluded. Officials with various degrees of affiliation to the CYL system would be treated differentially, so using the previous position in the CYL as a proxy for a politician’s political tie is valid (Table
16).
Appendix 5: Growth and land misallocation
A possible explanation is that growth incentives incentivize not better performance but more often misallocation of resources and pollution. Entrepreneurs, not bureaucrats, are the ones who need to be incentivized. Studying the possibility of misallocation is complicated because the data normally show only the area each firm occupies. Industry-level data and industry average land productivity data were therefore used. This indicator is similar to those used to measure the allocation of other factors such as external funds, physical capital, skilled labor, and contract enforcement (Nunn, 2007; Rajan & Zingales, 1998). Specifically, the correlation between total assets and land tax paid is used to represent the industry’s dependence on land. Land dependence refers to the degree to which a business or industry relies on land for its operations and development. If a business’s tax revenue related to land is highly correlated with its fixed asset size, it can be considered highly dependent on land. Similarly, if the correlation coefficient between land tax revenue and fixed assets is high among the various businesses in an industry, it indicates that the operation and development of that industry are highly dependent on land. Therefore, the correlation coefficient between fixed assets and land tax revenue is calculated for each industry as a measure of the industry’s dependence on land. Better allocation is defined as when industries relying more on land have more access to it (Table
17).
The regression results with this prefecture-industry data are reported in Table 9. Only the triple interaction term relating CYL affiliation, land dependence, and Post2012 and the corresponding variables are included in the regression reported in column (1). Regional economic variables are added in column (2), and then personal control variables and their interactions with the control variables in column (3). Throughout the three columns, the term representing an interaction of CYL with Post2012 still has a significant negative coefficient in predicting industry land supply, consistent with the previous findings. By contrast, the coefficient of the triple interaction term is significant and positive. Thus, a secretary with a CYL affiliation was inclined to supply more land to those industries that needed more after 2012. Land allocation was more efficient under the governance of a leader with a CYL background. Without growth pressure, such secretaries were free to supply land to the industries that needed it rather than the industries that could produce more output. Better allocation of land resources was an unintended effect of the dim prospects of those connected officials.
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Xue, C., Zhang, X. Promotion prospects and policy choice: evidence from the land market in China. Public Choice (2024). https://doi.org/10.1007/s11127-024-01145-5
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DOI: https://doi.org/10.1007/s11127-024-01145-5