ORIGINAL MANUSCRIPT
Wage premium of Communist Party membership: Evidence from China
Plamen Nikolov,
Hongjian Wang,
Kevin Acker,
Corresponding Author
Plamen Nikolov
State University of New York, Binghamton, New York, USA
Harvard Institute for Quantitative Social Science, Cambridge, Massachusetts, USA
IZA Institute of Labor Economics, Bonn, Germany
Correspondence
Plamen Nikolov, Department of Economics, State University of New York (Binghamton), Department of Economics, 4400 Vestal Parkway East, Binghamton, NY 13902, USA.
Email: pnikolov@binghamton.edu
Search for more papers by this authorHongjian Wang
State University of New York, Binghamton, New York, USA
Search for more papers by this authorKevin Acker
The Johns Hopkins University School of Advanced International Studies and The Hopkins-Nanjing Center, Nanjing, China
Search for more papers by this authorPlamen Nikolov,
Hongjian Wang,
Kevin Acker,
Corresponding Author
Plamen Nikolov
State University of New York, Binghamton, New York, USA
Harvard Institute for Quantitative Social Science, Cambridge, Massachusetts, USA
IZA Institute of Labor Economics, Bonn, Germany
Correspondence
Plamen Nikolov, Department of Economics, State University of New York (Binghamton), Department of Economics, 4400 Vestal Parkway East, Binghamton, NY 13902, USA.
Email: pnikolov@binghamton.edu
Search for more papers by this authorHongjian Wang
State University of New York, Binghamton, New York, USA
Search for more papers by this authorKevin Acker
The Johns Hopkins University School of Advanced International Studies and The Hopkins-Nanjing Center, Nanjing, China
Search for more papers by this authorAbstract
Social status and political connections may confer large economic benefits on an individual. Previous studies focused on China have examined the relationship between Communist Party membership and earnings and have revealed a positive correlation. However, the correlation could be partly or totally spurious. Using data from three surveys spanning three decades, we estimate the causal effect of Chinese Communist Party membership on monthly earnings in China. We find that, on average, membership in the Communist Party of China increases monthly earnings and the wage premium has grown in the last three decades. We explore potential causes and discover evidence that improvements in social networks and social rank, acquisition of job-related qualifications and greater life satisfaction play important roles in increased earnings.
Supporting Information
| Filename | Description |
|---|---|
| paer12318-sup-0001-Supinfo1.docxWord 2007 document , 106.1 KB | Appendix S1. Supporting Information. |
| paer12318-sup-0002-Supinfo2.docxWord 2007 document , 46 KB | Appendix S2. Supporting Information. |
Please note: The publisher is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing content) should be directed to the corresponding author for the article.
REFERENCES
- Abadie, A., Drukker, D., Herr, J. L., & Imbens, G. W. (2004). Implementing matching estimators for average treatment effects in Stata. Stata Journal, 4, 290–311.
- Angrist, J. D., & Krueger, A. B. (1999). Empirical strategies in labor economics. In O. Ashenfelter & D. Card (Eds.) (Eds.), Handbook of labor economics ( 1st ed., pp. 1277–1366). Amsterdam, The Netherlands: Elsevier.
10.1016/S1573-4463(99)03004-7 Google Scholar
- Angrist, J. D., & Pischke, J. (2008). Mostly harmless econometrics: An empiricist's companion ( 1st ed.). Princeton, NJ: Princeton University Press.
10.2307/j.ctvcm4j72 Google Scholar
- Appleton, S., Knight, J., Song, L., & Xia, Q. (2009). The economics of Communist Party membership: The curious case of rising numbers and wage premium during China's transition. The Journal of Development Studies, 45, 256–275.
- Ashenfelter, O., & Krueger, A. (1994). Estimates of the economic return to schooling from a new sample of twins. The American Economic Review, 84(5), 1157–1173. Retrieved from http://www.jstor.org/stable/2117766.
- Ashenfelter, O., & Rouse, C. (1998). Income, schooling, and ability: Evidence from a new sample of identical twins. The Quarterly Journal of Economics, 113, 253–284.
- Behrman, J. R., Rosenzweig, M. R., & Taubman, P. (1994). Endowments and the allocation of schooling in the family and in the marriage market: The twins experiment. Journal of Political Economy, 102, 1131–1174.
- Bhalotra, S., & Clarke, D. (2019). Twin birth and maternal condition. The Review of Economics and Statistics, 101, 853–864.
- Bian, Y. (1994). Guanxi and the allocation of urban jobs in China. The China Quarterly, 140, 971–999.
- Bian, Y., Shu, X., & Logan, J. R. (2001). Communist Party membership and regime dynamics in China. Social Forces, 79, 805–841.
- Busso, M., DiNardo, J., & McCrary, J. (2014). New evidence on the finite sample properties of propensity score reweighting and matching estimators. Review of Economics and Statistics, 96, 885–897.
- Cochran, W. G. (1968). The effectiveness of adjustment by subclassification in removing bias in observational studies. Biometrics, 24, 295–313.
- Das, M. B., & Dutta, P. (2007). Does caste matter for wages in the Indian labor market? (World Bank Working Paper No. Mimeo). Washington, DC: The World Bank. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.190.3708&rep=rep1&type=pdf
- Dehejia, R. H., & Wahba, S. (1999). Causal effects in nonexperimental studies: Reevaluating the evaluation of training programs. Journal of the American Statistical Association, 94, 1053–1062.
- Dehejia, R. H., & Wahba, S. (2002). Propensity score-matching methods for nonexperimental causal studies. Review of Economics and Statistics, 84, 151–161.
- Erkal, N., & Kali, R. (2011). Political connections, entrepreneurship, and social network investment. (Working Paper No. Mimeo). Melbourne, Australia: University of Melbourne.
- Eswaran, M., Ramaswami, B., & Wadhwa, W. (2013). Status, caste, and the time allocation of women in rural India. Economic Development and Cultural Change, 61, 311–333.
- Fisman, R. (2001). Estimating the value of political connections. The American Economic Review, 91, 1095–1102.
- Frangakis, C. E., & Rubin, D. B. (2002). Principal stratification in causal inference. Biometrics, 58, 21–29.
- Glazerman, S., Levy, D. M., & Myers, D. (2003). Nonexperimental versus experimental estimates of earnings impacts. The Annals of the American Academy of Political and Social Science, 589, 63–93.
- Granovetter, M. S. (1973). The strength of weak ties. American Journal of Sociology, 78, 1360–1380.
- Granovetter, M. S. (1995). Getting a job: A study of contacts and careers. Chicago: University of Chicago Press.
10.7208/chicago/9780226518404.001.0001 Google Scholar
- Greenland, S. (2003). Quantifying biases in causal models: Classical confounding vs. collider-stratification bias. Epidemiology, 14, 300–306.
- Griliches, Z. (1979). Sibling models and data in economics: Beginnings of a survey. Journal of Political Economy, 87(5, Part 2), S64.
- Growiec, K., & Growiec, J. (2016). Bridging social capital and individual earnings: Evidence for an inverted U. Social Indicators Research, 127, 601–631.
- Heckman, J. J., Ichimura, H., & Todd, P. (1998). Matching as an econometric evaluation estimator. The Review of Economic Studies, 65, 261–294.
- Heckman, J. J., LaLonde, R. J., & Smith, J. A. (1999, 1865–2097). Chapter 31 the economics and econometrics of active labor market programs. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics. Amsterdam, The Netherlands: Elsevier.
10.1016/S1573-4463(99)03012-6 Google Scholar
- Hill, J. L., Reiter, J. P., & Zanutto, E. L. (2004). A comparison of experimental and observational data analyses. In A. Gelman & X. Meng (Eds.), Wiley series in probability and statistics ( 1st ed., pp. 49–60). Hoboken, NJ: John Wiley and Sons..
- Hollander, M., Wolfe, D. A., & Chicken, E. (2013). Nonparametric statistical methods ( 3rd ed.). Hoboken, NJ: John Wiley and Sons.
- Hunt, H. (2011). Joining the party: Youth recruitment in the Chinese Communist Party. US-China Today, 1–20 Retrieved from https://uschinatoday.org/features/2011/11/07/joining-the-party-youth-recruitment-in-the-chinese-communist-party/
- Imai, K., & Ratkovic, M. (2014). Covariate balancing propensity score. Journal of the Royal Statistical Society: Series B (Statistical Methodology), 76, 243–263.
- Imbens, G., & Wooldridge, J. M. (2007). Estimation of average treatment effects under unconfoundedness. Paper presented at What's New in Econometrics. NBER (National Bureau of Economic Research), Cambridge, MA.
- Imbens, G. W. (2004). Nonparametric estimation of average treatment effects under exogeneity: A review. Review of Economics and Statistics, 86, 4–29.
- Imbens, G. W., & Rubin, D. B. (2015). Causal inference in statistics, social, and biomedical sciences ( 1st ed.). Cambridge, England: Cambridge University Press.
10.1017/CBO9781139025751 Google Scholar
- Khan, S., & Tamer, E. (2010). Irregular identification, support conditions, and inverse weight estimation. Econometrica, 78, 2021–2042.
- Koenker, R., & Jr, G. B. (1978). Regression quantiles. Econometrica: Journal of the Econometric Society, 46, 33–50.
- Lee, H. Y. (1991). From revolutionary cadres to party technocrats in socialist China ( 1st ed.). Berkeley, CA: Univ of California Press.
- Li, H., Liu, P. W., Zhang, J., & Ma, N. (2007). Economic returns to Communist Party membership: Evidence from urban Chinese twins. The Economic Journal, 117, 1504–1520.
- Light, A., & Flores-Lagunes, A. (2006). Measurement error in schooling: Evidence from samples of siblings and identical twins. The BE Journal of Economic Analysis and Policy, 5(1), 2194–6108.
- Madheswaran, S., & Attewell, P. (2007). Caste discrimination in the Indian urban labor market: Evidence from the national sample survey. Economic and Political Weekly, 42, 4146–4153.
- Marmaros, D., & Sacerdote, B. (2002). Peer and social networks in job search. European Economic Review, 46, 870–879.
- McMorrow, R. W. (2016). Membership in the Communist Party of China: Who is being admitted and how? JSTOR Politics and History. Retrieved from http://daily.jstor.org/communist-party-of-china/.
- Miller, P., Mulvey, C., & Martin, N. (1995). What do twins studies reveal about the economic returns to education? A comparison of Australian and US findings. The American Economic Review, 85, 586–599.
- Mincer, J. (1974). Schooling, experience, and earnings. Human behavior and social institutions no. 2 ( 1st ed.). Cambridge, MA: National Bureau of Economic Research.
- Montgomery, J. D. (1991). Social networks and labor market outcomes: Toward an economic analysis. The American Economic Review, 81, 1408–1418.
- Morduch, J., & Sicular, T. (2000). Politics, growth, and inequality in rural China: Does it pay to join the party? Journal of Public Economics, 77, 331–356.
- Neumark, D. (1999). Biases in twin estimates of the return to schooling. Economics of Education Review, 18, 143–148.
- Nikolov, P., Jimi, N., & Chang, J. (2020). The importance of cognitive domains and the returns to schooling in South Africa: Evidence from two labor surveys. Labour Economics. Forthcoming.
- Pan, X. (2010). The labor market, political capital, and ownership sector in urban China. Lexington, Kentucky: University of Kentucky, Mimeo.
- Patacchini, E., & Zenou, Y. (2012). Ethnic networks and employment outcomes. Regional Science and Urban Economics, 42, 938–949.
- Rees, A. (1966). Information networks in labor markets. The American Economic Review, 56, 559–566.
- Rosenbaum, P. R. (1984). The consequences of adjustment for a concomitant variable that has been affected by the treatment. Journal of the Royal Statistical Society, 147, 656–666.
- Rosenbaum, P. R. (2002). Observational studies ( 1st ed.). New York, NY: Springer-Verlag New York.
10.1007/978-1-4757-3692-2 Google Scholar
- Rosenbaum, P. R., & Rubin, D. B. (1983). The central role of the propensity score in observational studies for causal effects. Biometrika, 70, 41–55.
- Rosenbaum, P. R., & Rubin, D. B. (1984). Reducing bias in observational studies using subclassification on the propensity score. Journal of the American Statistical Association, 79, 516–524.
- Rosenbaum, P. R., & Rubin, D. B. (1985). Constructing a control group using multivariate matched sampling methods that incorporate the propensity score. The American Statistician, 39, 33–38.
- Roy, A. D. (1951). Some thoughts on the distribution of earnings. Oxford Economic Papers, 3, 135–146.
- Rubin, D. B., & Thomas, N. (1996). Matching using estimated propensity scores: Relating theory to practice. Biometrics, 52, 249–264.
- Sandewall, Ö., Cesarini, D., & Johannesson, M. (2014). The co-twin methodology and returns to schooling—Testing a critical assumption. Labour Economics, 26, 1–10.
- Siddique, Z. (2011). Evidence on caste based discrimination. Labour Economics, 18, S159.
- Singh, A. (2010). Do returns to farming depend on caste? New evidence from India. (MPRA Paper No. 26526). Bombay, India: Indian Institute of Technology.
- South China Morning Post. (2015). China's Communist Party now larger than the population of Germany. Hong Kong, China: South China Morning Post. Retrieved from http://www.scmp.com/news/china/policies-politics/article/1829407/chinas-communist-party-enlists-million-new-members
- Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87, 355–374. https://doi.org/10.2307/1882010
- The Economist (2014). Rushing to join. The Economist. Retrieved from https://www.economist.com/china/2014/02/22/rushing-to-join.
- Thoemmes, F. J., & Kim, E. S. (2011). A systematic review of propensity score methods in the social sciences. Multivariate Behavioral Research, 46, 90–118.
- Thorat, A. (2010). Ethnicity, caste and religion: Implications for poverty outcomes. Economic and Political Weekly, 45, 47–53.
- Unger, J. (1982). Education under Mao: Class and competition in canton schools, 1960–1980. New York, NY: Columbia University Press.
- Velasco, M. S. (2012). More than just good grades: Candidates’ perceptions about the skills and attributes employers seek in new graduates. Journal of Business Economics and Management, 13, 499–517.
- Weiss, Y., & Fershtman, C. (1998). Social status and economic performance: A survey. European Economic Review, 42, 801–820.
- Willis, R. J. (1986). Chapter 10 wage determinants: A survey and reinterpretation of human capital earnings functions. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics (pp. 525–602). Amsterdam, The Netherlands: Elsevier.
- Wu, W., Wu, C., & Rui, O. M. (2012). Ownership and the value of political connections: Evidence from China. European Financial Management, 18, 695–729.
- Xia, M. (2006). The Communist Party of China and the “party-state.” The New York Times.
- Xie, Y., Brand, J. E., & Jann, B. (2012). Estimating heterogeneous treatment effects with observational data. Sociological Methodology, 42, 314–347.
- Yashiv, E. (2007). Labor search and matching in macroeconomics. European Economic Review, 51, 1859–1895.
- Yip, W., Subramanian, S. V., Mitchell, A. D., Lee, D. T., Wang, J., & Kawachi, I. (2007). Does social capital enhance health and well being? Evidence from rural China. Social Science and Medicine, 64, 35–49.
- Zhang, S., & Anderson, S. (2014). Individual economic well being and the development of bridging and bonding social capital. Social Development Issues, 36, 33–51.
