The Economics of Communist Party Membership: The Curious Case of Rising Numbers and Wage Premium during China's Transition

32 Pages Posted: 23 May 2008

See all articles by Simon Appleton

Simon Appleton

University of Nottingham - School of Economics

John B. Knight

University of Oxford - Department of Economics

Lina Song

Nottingham University Business School

Qingjie Xia

Peking University

Abstract

Why is it that, as the Chinese Communist Party has loosened its grip, abandoned its core beliefs, and marketized the economy, its membership has risen markedly along with the economic benefits of joining? We use three national household surveys, spanning eleven years, to answer this question with respect to labour market rewards in urban China. We conceptualize individual demand for Party membership as an investment in "political capital" that brings monetary rewards in terms of higher wages. This wage premium has risen with the growing wage differentials associated with the emergence of a labour market and the continuing value of political status in the semi-marketized transitional economy. However, a demand-side explanation does not explain the fact that the wage premium is higher for the personal characteristics that reduce the probability of membership. We develop an explanation in terms of a rationing of places and a scarcity value for members with those characteristics.

Keywords: China, Communist Party, labour market, economic transition, wages

JEL Classification: J31, J40, J71, P20, P30

Suggested Citation

Appleton, Simon and Knight, John B. and Song, Lina and Xia, Qingjie, The Economics of Communist Party Membership: The Curious Case of Rising Numbers and Wage Premium during China's Transition. IZA Working Paper No. 3454, Available at SSRN: https://ssrn.com/abstract=1136175 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Simon Appleton (Contact Author)

University of Nottingham - School of Economics ( email )

University Park
Nottingham NG7 2RD
United Kingdom

John B. Knight

University of Oxford - Department of Economics ( email )

Oxford
United Kingdom

Lina Song

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road,
Nottingham, NG8 1BB
United Kingdom
0115 8466217 (Phone)

Qingjie Xia

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

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