Flattening of government hierarchies and growth of farmers’ income

Caiquan Bai, Yan Zhang, Chao Wang, Qihang Xue and Chen Feng

Journal of Asian Economics, 2024, vol. 95, issue C

Abstract: Continuously raising farmers’ income is important for poverty reduction. In a multilevel government system, institutional arrangements can influence the role of grassroots governments in economic and social development. Based on the rural statistical data of 743 townships in Province A in central China from 2001 to 2012, we use the difference-in-differences (DID) approach to investigate the effect of the reform of flattening governmental hierarchy at the township level on increasing farmers’ income. We find that the reform of grassroots flattening hierarchies significantly promotes the growth of farmers’ income. Specifically, in the face of economic-assessment pressure from the higher-level government and the incentives of fiscal excess revenue in the reform, the township government will make full use of the greater administrative power and resources endowed by the reform to vigorously attract investment to increase the number of enterprises and provide farmers with more non-agricultural employment opportunities, thus raising their wage income. Moreover, this reform’s income-increasing effect is more obvious in townships that are closer to the county seat and have more convenient transportation, a higher level of human capital, and a stronger ability to exercise administrative power.

Keywords: Flattening of government hierarchies; Authority enlargement at township level; Grassroots government; Growth of farmers’ income; Non-agricultural employment (search for similar items in EconPapers)
JEL-codes: E62 H77 J43 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:95:y:2024:i:c:s1049007824001313

DOI: 10.1016/j.asieco.2024.101836

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