American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Go with the Politician
American Economic Journal: Economic Policy
(pp. 467–96)
Abstract
Chinese local leaders are frequently moved across prefectures. By combining local leader rotation data and comprehensive firm land parcel purchase data across prefectures from 2006 to 2016, this paper examines how firm-politician connections affect resource allocation and finds that a firm headquartered in a leader's previous work prefecture purchases three times more land parcels in that leader's new governing prefecture than the prefecture-year mean, at half the unit prices. Identification is from within-firm-year variation in various prefectures through exogenous politician rotation. Land usage efficiency is lower for these follower firms' land parcels. Land allocation distortion is also economically sizable.Citation
Nian, Yongwei, and Chunyang Wang. 2023. "Go with the Politician." American Economic Journal: Economic Policy 15 (2): 467–96. DOI: 10.1257/pol.20200882Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- P25 Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
- P26 Political Economy and Comparative Economic Systems; Property Rights