IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v52y2018icp192-203.html
   My bibliography  Save this article

The effects of institutionalization in China: A difference-in-differences analysis of the mandatory retirement age

Author

Listed:
  • Liu, Derek Tai-wei

Abstract

This study takes advantage of a “natural experiment” to show how institutionalization shapes economic outcomes in China. Beijing introduced the mandatory retirement age for provincial leaders in the 1980s, but the rule was not enforced across all provinces until 2000. I use this window to construct a difference-in-differences design and show how the enforcement of mandatory retirement rule leads to better economic outcomes. Provincial leaders eligible for promotion are now motivated to perform better on growth in order to succeed under the performance-based promotion system. But this institution is not perfect, as it results in poorer performances among lame-duck leaders near the retirement age. I also find that leaders with central connection tend to have worse performances. This suggests that when politicians have connection with the center, they hold the key to promotion already, so they do not need to worry about the Chinese-style yardstick competition.

Suggested Citation

  • Liu, Derek Tai-wei, 2018. "The effects of institutionalization in China: A difference-in-differences analysis of the mandatory retirement age," China Economic Review, Elsevier, vol. 52(C), pages 192-203.
    • Handle: RePEc:eee:chieco:v:52:y:2018:i:c:p:192-203
    DOI: 10.1016/j.chieco.2018.07.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X18300956
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2018.07.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Titus O. Awokuse & Weishi Grace Gu, 2015. "Does Foreign Intellectual Property Rights Protection Affect Us Exports And Fdi?," Bulletin of Economic Research, Wiley Blackwell, vol. 67(3), pages 256-264, July.
    2. Tsai, Lily L., 2007. "Solidary Groups, Informal Accountability, and Local Public Goods Provision in Rural China," American Political Science Review, Cambridge University Press, vol. 101(2), pages 355-372, May.
    3. Eric Maskin & Yingyi Qian & Chenggang Xu, 2000. "Incentives, Information, and Organizational Form," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(2), pages 359-378.
    4. Olivier Blanchard & Andrei Shleifer, 2001. "Federalism With and Without Political Centralization: China Versus Russia," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-8.
    5. Huang,Yasheng, 1996. "Inflation and Investment Controls in China," Cambridge Books, Cambridge University Press, number 9780521554831, October.
    6. Ruixue Jia & Huihua Nie, 2017. "Decentralization, Collusion, and Coal Mine Deaths," The Review of Economics and Statistics, MIT Press, vol. 99(1), pages 105-118, March.
    7. Zhang, Jin & Wang, Lanfang & Wang, Susheng, 2012. "Financial development and economic growth: Recent evidence from China," Journal of Comparative Economics, Elsevier, vol. 40(3), pages 393-412.
    8. Chen, Ye & Li, Hongbin & Zhou, Li-An, 2005. "Relative performance evaluation and the turnover of provincial leaders in China," Economics Letters, Elsevier, vol. 88(3), pages 421-425, September.
    9. Awokuse, Titus O. & Yin, Hong, 2010. "Intellectual property rights protection and the surge in FDI in China," Journal of Comparative Economics, Elsevier, vol. 38(2), pages 217-224, June.
    10. Lu, Yi & Png, Ivan P.L. & Tao, Zhigang, 2013. "Do institutions not matter in China? Evidence from manufacturing enterprises," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 74-90.
    11. Zhang, Xiaobo, 2006. "Fiscal decentralization and political centralization in China: Implications for growth and inequality," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 713-726, December.
    12. Demurger, Sylvie, 2001. "Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China?," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 95-117, March.
    13. Huang, Yasheng & Sheng, Yumin, 2009. "Political Decentralization and Inflation: Sub-National Evidence from China," British Journal of Political Science, Cambridge University Press, vol. 39(2), pages 389-412, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiang, Xiaoxian & Jin, Ruijie & Gong, Min & Li, Mingzhu, 2022. "Are heterogeneous customers always good for iterative innovation?," Journal of Business Research, Elsevier, vol. 138(C), pages 324-334.
    2. Hao, Rubin & Liao, Guanmin & Ding, Wenhong & Guan, Wei, 2022. "The informativeness of regional GDP announcements: Evidence from China," Journal of Empirical Finance, Elsevier, vol. 67(C), pages 78-99.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hao, Yu & Liu, Jiahui & Lu, Zhi-Nan & Shi, Ruijie & Wu, Haitao, 2021. "Impact of income inequality and fiscal decentralization on public health: Evidence from China," Economic Modelling, Elsevier, vol. 94(C), pages 934-944.
    2. Wu, Mingqin & Chen, Bin, 2016. "Assignment of provincial officials based on economic performance: Evidence from China," China Economic Review, Elsevier, vol. 38(C), pages 60-75.
    3. Li, Lixing, 2011. "The incentive role of creating "cities" in China," China Economic Review, Elsevier, vol. 22(1), pages 172-181, March.
    4. Xu, Cheng-Gang, 2010. "The Institutional Foundations of China?s Reforms and Development," CEPR Discussion Papers 7654, C.E.P.R. Discussion Papers.
    5. Huiming Zhang & Lifang Xiong & Yueming Qiu & Dequn Zhou, 2017. "How Have Political Incentives for Local Officials Reduced Environmental Pollution in Resource-Depleted Cities?," Sustainability, MDPI, vol. 9(11), pages 1-14, October.
    6. Che, Jiahua & Chung, Kim-Sau & Lu, Yang K., 2017. "Decentralization and political career concerns," Journal of Public Economics, Elsevier, vol. 145(C), pages 201-210.
    7. Petra Persson & Ekaterina Zhuravskaya, 2016. "The Limits of Career Concerns in Federalism: Evidence from China," Journal of the European Economic Association, European Economic Association, vol. 14(2), pages 338-374.
    8. Liang, Quanxi & Huang, Jinlan & Liang, Mingjun & Li, Jingxiang, 2024. "Economic growth targets and bank risk exposure: Evidence from China," Economic Modelling, Elsevier, vol. 135(C).
    9. Wang, Li & Menkhoff, Lukas & Schröder, Michael & Xu, Xian, 2019. "Politicians’ promotion incentives and bank risk exposure in China," Journal of Banking & Finance, Elsevier, vol. 99(C), pages 63-94.
    10. Jingxia Chai & Yu Hao & Haitao Wu & Yuemiao Yang, 2021. "Do constraints created by economic growth targets benefit sustainable development? Evidence from China," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 4188-4205, December.
    11. Liu, Guy S. & Sun, Pei & Woo, Wing Thye, 2006. "The Political Economy of Chinese-Style Privatization: Motives and Constraints," World Development, Elsevier, vol. 34(12), pages 2016-2033, December.
    12. Hanming Fang & Ming Li & Zenan Wu, 2022. "Tournament-Style Political Competition and Local Protectionism: Theory and Evidence from China," PIER Working Paper Archive 22-031, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    13. Fenghua Pan & Fengmei Zhang & Shengjun Zhu & Dariusz Wójcik, 2017. "Developing by borrowing? Inter-jurisdictional competition, land finance and local debt accumulation in China," Urban Studies, Urban Studies Journal Limited, vol. 54(4), pages 897-916, March.
    14. Jin, Hehui & Qian, Yingyi & Weingast, Barry R., 2005. "Regional decentralization and fiscal incentives: Federalism, Chinese style," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1719-1742, September.
    15. Chenggang Xu, 2011. "The Fundamental Institutions of China's Reforms and Development," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1076-1151, December.
    16. Lei, Yu-Hsiang, 2021. "Quid pro quo? Government-firm relationships in China," Journal of Public Economics, Elsevier, vol. 199(C).
    17. Longjin Chen & Jian Huang & Jianjun Li, 2017. "Fiscal Decentralization, Satisfaction with Social Services, and Inequality Under the Hukou System," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(1), pages 377-394, May.
    18. Robert Huggins & Shougui Luo & Piers Thompson, 2014. "The competitiveness of China's Leading Regions: Benchmarking Their Knowledge-based Economies," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 105(3), pages 241-267, July.
    19. Tan, Jing & Liu, Tianyi & Xu, Hao, 2024. "The environmental and economic consequences of environmental centralization: Evidence from China's environmental vertical management reform," China Economic Review, Elsevier, vol. 84(C).
    20. Alfred M Wu, 2019. "The logic of basic education provision and public goods preferences in Chinese fiscal federalism," PLOS ONE, Public Library of Science, vol. 14(12), pages 1-15, December.

    More about this item

    Keywords

    China; Institutionalization; Mandatory retirement; Growth; Career incentives;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects
    • P35 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:52:y:2018:i:c:p:192-203. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.