Elitism and Returns to CPC Membership in China[1]

 

 

Yunzhi Hu[2] and Yang Yao[3]

 

 

 

No. E2012003    October 25, 2012

 

Abstract:

One of the puzzling observations about the Communist Party of China (CPC) is that its membership has been more than doubled in the last thirty years despite the market has replaced political loyalty in determining ordinary people’s achievement. This paper proposes and tests a set of hypotheses revolving around the idea that the CPC has kept its appeal by strategically shifting its organizational efforts to sectors with potential high rents while the economy is liberalized. In doing so, the CPC is able to attract more talented people. We show with national data that over the time the CPC has set up more grassroots organizations in high-rent sectors than in low-rent sectors and CPC members have become more elitist. Using individual data provided by two national surveys, we find that CPC members are more likely to find a job in high-rent sectors, and compared with those in low-rent sectors, people already working in high-rent sectors are more likely to submit applications to the party and the party is more likely to accept them. In addition, CPC members in high-rent sectors enjoy higher premiums of the party membership in promotion and earnings compared to their counterparts in low-rent sectors. To take care of the confounding factor of unobserved abilities determining party membership and sectoral choices, we run various specifications under different scenarios and find that our results are robust.

Keywords: CPC membership, interest groups, rent seeking

JEL: D31, D71, J31, P20

No. E2012003

 

[1] We thank the participants of the Ronald Coase Institute 2010 Shanghai Workshop on Institutional Analysis and the 2011 ISNIE Annual Conference as well as Alexandra Benham, Lee Benham, Uri Bram, Gary Libecap and Mary Shirley for helpful comments.

[2] Graduate student, Department of Economics, University of Chicago, hyz1292000@gmail.com.

[3] Professor,China Center for Economic Research, National School of Development, Peking University, Beijing 100871, China,yyao@ccer.pku.edu.cn.