Political Control and Economic Inequality: Evidence from Chinese Cities

This paper explores the consequence of political control on intra-city economic inequality. Utilizing the unique political institution with mass cadre transfers and household survey data from 81 Chinese cities in 2010, 2012, and 2014, we find that cities with a “local” leader enjoy an almost 6% reduction in expenditure inequality, and the gap is especially narrowed in the lower income families. The reduction is attributed to larger amount of targeted transfers to low-income households. This paper is among the first to empirically support the argument supporting local residence duration for office holding in public sectors, and also contributes to understanding the political economy of social welfare programs as well as campaigns in inequality reduction.