Interjurisdiction Political Competition and Social Welfare in China

• In Event: Social Welfare and Redistribution in Post-Communist Nations

Abstract

A rich literature has explained China’s economic miracle on account of political tournament, but scant attention was paid to how such interjurisdiction political competition may impact local social welfare spending. To win the promotion game, local leaders tend to budget strategically to boost economic performance with quick results during their tenure. We argue that this may crowd out social welfare, which is less visible, demands long-term commitment, and improves economic productivity via long-chain mechanisms. When interjurisdiction political competition is more intense, local cadres are more likely to budget for promotion and thus reduce social welfare expenditures. Moreover, this reduction is more salient in the early years of city leaders’ tenure when the prospect of promotion is largely unclear, thus generating political cycles of social policies. We compile a prefecture-level panel dataset from 1995 to 2007 for empirical tests.

Authors

• Yanjun Liu, Peking University

• Liwei Zhou, Peking University School of Government