Scandinavian Working Papers in Economics

Stockholm School of Economics Asia Working Paper Series,
Stockholm School of Economics, Stockholm China Economic Research Institute

No 2013-26: Downward Accountability in Response to Collective Actions: The Political Economy of Public Goods Provision in China

Yuan Li ()
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Yuan Li: Stockholm China Economic Research Institute, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: Will autocratic governments implement policies to satisfy the people’s demands in order to prevent large scale social unrest? This paper explores this question through quantitatively analysis of the political economy of public goods provision in Chinese provinces. I collected data on the number of labor disputes to measure collective actions. My sample includes provincial leaders whose incentives to deliver public goods can either be explained as a result of upward accountability towards the Center or downward accountability towards the citizens. The confounding factor of upward accountability is ruled out by using two-step estimation; and the reverse causality between public goods provision and collective actions is controlled by using instrumental variables. Result suggests that provincial leaders will implement policies more in favor of the citizens in response to intensified labor disputes.

Keywords: Accountability; Collective Actions; Public Goods

JEL-codes: D74; H11; H40; P26

39 pages, August 27, 2013

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