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

Simon Mark Appleton, John Knight, Lina Song and Qingjie Xia ()
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Qingjie Xia: Peking University

No 3454, IZA Discussion Papers from Institute for the Study of Labor (IZA)

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: Communist Party; labour market; economic transition; China; wages (search for similar items in EconPapers)
JEL-codes: J31 J40 J71 P20 P30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-dev and nep-tra
Date: Written 2008-04
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Forthcoming: Journal of Development Studies, 2009

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Working Paper: The economics of Communist Party membership - The Curious case of rising numbers and wage premium during China’s transition (2008)
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