Essays on the Political Economy of China

Abstract

Modern authoritarian regimes, unlike their predecessors, rely more on economic incentives than on terror to foster support and compliance. This dissertation aims to understand how individual behaviors and preferences are shaped by economic incentives provided by authoritarian regimes. My investigation is built upon China, one of the largest and most enduring authoritarian regimes in modern history. In three chapters, through case studies of migration restrictions, bureaucratic reforms, and trade power, I show that the Chinese regime wields significant influence over individual behaviors and preferences, both domestically and internationally. Chapter 2: From Settlement to Stability: The Political Impact of Relaxing Migration Barriers in China (with Yu Qiu) There are growing concerns that a relaxed migration policy may undermine social stability. We study this issue by estimating the causal effect of China's recent reform to its internal migration institutions on labor unrest, which facilitated permanent settlement for migrants in small- and medium-sized cities. Exploiting variation due to the reform's population cutoff rule, we find that the reform significantly reduced labor unrest. We suggest that one important mechanism behind our finding is the enhancement of migrants' settlement intentions, which makes migrants less engaged in unrest to secure the opportunity of settlement offered by the reform. We provide evidence that the reform increased migrants' likelihood of remaining in their destinations. Through a novel causal mediation analysis, we find that heightened settlement intentions can explain 61 percent of decreased labor unrest due to the reform in the immediate term and 27 percent in the long term. We find no evidence that the reform led to compositional changes among migrants, delivery of benefits to migrants, or tighter government social control. Our results highlight how migration policy can influence stability by shaping migrants' attachment to migration destinations. Chapter 3: China's Anti-Corruption Campaign and Civil Servant Fever (with Xun Li) What is the impact of anti-corruption efforts on entry into bureaucratic jobs? This paper approaches this question theoretically and empirically through the lens of China's anti-corruption campaign since 2013. We leverage a novel dataset of national civil service exams. Exploiting assignment and timing variations in anti-corruption inspections on government departments, our difference-in-differences estimate shows that a department had significantly fewer applicants following an inspection. We provide evidence that the decline in bureaucratic entry has occurred since the campaign lowered the (expected) returns from bureaucratic jobs by (i) improving corruption detection and (ii) constraining power likely to be abused. In contrast, we do not find evidence that the campaign affected legal income. Furthermore, simulation exercises suggest that after the anti-corruption campaign, incoming bureaucrats may have lower ability but higher prosociality than before. Chapter 4: The Impact of Trade on Foreign Policy Preferences: The Case of Taiwan How does trade shape foreign policy preferences? I study this question leveraging the unique setting of Taiwan, where exports heavily rely on the Chinese market, and the major political cleavage is relations with China. Using a shift-share instrumental variable strategy, I find that in presidential elections, Taiwanese townships with more exports to China vote less for the Democratic Progressive Party, the major party that unequivocally supports Taiwanese independence. I offer suggestive evidence that voters favor a more conciliatory foreign policy toward China to mitigate the risk of economic losses in the event of geopolitical tension.