UBC Theses and Dissertations
Essays in Chinese political economy Wiebe, Michael
China has sustained incredible double-digit economic growth over three decades. In Chapter 2, I investigate one common explanation for this: meritocratic promotion, where officials at the same level compete with each other on the basis of relative GDP growth, and the winners are rewarded with promotion up the administrative hierarchy. This tournament competition generates strong incentives for politicians to boost growth. However, studying prefecture leaders, I find no evidence of meritocracy. My null result is stable across different definitions of promotion, regression models, and measures of GDP growth. I rule out possible alternative explanations. Meritocracy is not being implemented separately for politically connected and unconnected leaders, or for leaders who are environmentally friendly. Moreover, the 2012 corruption crackdown has not effected a structural change in promotion criteria. In Chapter 3, I reanalyze the literature on meritocratic promotion. Replicating five papers, I find that the evidence for prefecture leaders is not robust to reasonable specification choices. I conclude that my null result is not contradicted by the literature. However, I do find some evidence of meritocracy for county leaders, and propose a model where county-level meritocracy can be an explanation for China’s economic growth, by incentivizing county leaders and selecting higher-level leaders based on ability to grow the economy. The co-authored Chapter 4 studies the role of tax collector discretion in preventing tax evasion in China. The motivating puzzle is that firms bunch above, rather than below, notches in the corporate tax schedule. We propose a model where tax collectors use an enforcement technology, discretion over prepayments, to prevent firms from evading. Tax collectors assign higher prepayment rates to suspected tax evaders, as a signal to deter evasion. In response, firms do not evade, and bunch above the notch. To corroborate this interpretation, we study a policy reform that removed tax collector discretion over prepayments. Following the reform, bunching above the notches decreased substantially. Without their enforcement technology, tax collectors were no longer able to prevent evasion.
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