DP8975 The Effects of Democratization on Public Goods and Redistribution: Evidence from China

Author(s): Monica Martinez-Bravo, Gerard Padro, Nancy Qian, Yang Yao
Publication Date: May 2012
Keyword(s): Democracy, Elections, Institutions
JEL(s): P16
Programme Areas: Development Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=8975

This study investigates the effects of introducing elections on public goods and redistribution in rural China. We collect a large and unique survey to document the history of political reforms and economic policies and exploit the staggered timing of the introduction of elections for causal identification. We find that elections significantly increase public goods expenditure, the increase corresponds to demand and is paralleled by an increase in public goods provision and local taxes. We also find that elections cause significant income redistribution within villages. The results support the basic assumptions of recent theories of democratization (Acemoglu and Robinson, 2000; Lizzeri and Persico, 2004). In addition, we show that the main mechanism underlying the effect of elections is increased leader incentives.