Politicians' egalitarian cultural values and within-firm wage gaps: Evidence from China

Jie Li, Wanlin Liu, Changyuan Luo and Hong Song

Journal of Economic Behavior & Organization, 2025, vol. 236, issue C

Abstract: This paper examines how local government politicians’ egalitarian cultural values affect within-firm wage gaps using data from China. We measure these values through prefecture-level Party Secretaries’ hometown egalitarian cultural orientation and leverage exogenous variation from personnel rotations. Results show that stronger egalitarian values among incumbent officials correlate with narrower wage gaps. Robustness checks, including high-dimensional fixed effects and instrumental variable regressions, address endogeneity concerns such as omitted variable bias. Mechanism analysis reveals that firms adjust wage gaps to secure political legitimacy and government-controlled resources, particularly under heightened regulatory scrutiny or market competition. Furthermore, non-state-owned enterprises aligning wage gaps with officials’ egalitarian values receive preferential treatment, including increased tax rebates and subsidies. These findings underscore the role of local leaders’ cultural preferences in shaping firms’ behaviors.

Keywords: Within-firm wage gap; Egalitarian cultural values; Political legitimacy; China (search for similar items in EconPapers)
JEL-codes: D22 H70 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268125002112
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:236:y:2025:i:c:s0167268125002112

DOI: 10.1016/j.jebo.2025.107092

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().