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Wage premium of Communist Party membership: Evidence from China
Author(s) -
Nikolov Plamen,
Wang Hongjian,
Acker Kevin
Publication year - 2020
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.12318
Subject(s) - communism , earnings , china , spurious relationship , wage , economics , politics , demographic economics , labour economics , political science , finance , machine learning , computer science , law
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.