Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/210426
Authors: 
Wang, Bin
Zheng, Yu
Year of Publication: 
2018
Series/Report no.: 
Working Paper No. 872
Publisher: 
Queen Mary University of London, School of Economics and Finance, London
Abstract: 
We provide a theory of how growth, corruption, and a low-powered public-sector pay scale coexist in a stable equilibrium in the early stage of China's development. The regionally decentralized authoritarian regime of China features lower-level government officials competing for promotion to a higher level in the government by generating local economic growth, and calls for high-powered incentives to elicit effort from the the officials. However, this is at odds with the generally low-powered public-sector pay scale in China. We propose a principal-agent model, where the principal represents the Chinese people's desire to pursue economic growth and the agents are the government officials delegated with production tasks and organized in a tournament, to address how a low-powered pay scale can effectively elicit effort in a tournament infested with widespread corruption.
Subjects: 
Institution
Tournament
Corruption
China
JEL: 
D73
J45
O43
P26
Document Type: 
Working Paper

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