East Asia Workshop: Politics, Economy and Society and
Chicago Chinese Social Sciences Research Group present
“Competence versus Incentive: Evidence from City Officials in China”
Professor, National School of Development
2015 Dr. Scholl Foundation Visiting Fellow on US-China Relations
The Chicago Council on Global Affairs
4:30-6:00p.m., Tuesday, October 6, 2015
Room 122, Social Science Research Building, 1126 E 59th St.
Yang Yao is a professor at the China Center for Economic Research (CCER) and the National School of Development (NSD), Peking University. He currently serves as the director of CCER and the dean of NSD. He is a member of the China Finance 40 Forum. His research interests include economic transition and development in China. He has published dozens of research papers in international and domestic journals as well as several books on institutional economics and economic development in China. He is also a prolific writer for magazines and newspapers, including the Financial Times and the Project Syndicate. Dr. Yao was awarded the 2009 Sun Yefang Award in Economic Science, the 2008 and 2010 Pu Shan Award in International Economics and the 2008 Zhang Peigang Award in Development Economics, and was named the Best Teacher by the Peking University Student Union in 2006. Dr Yao obtained a BS in geography in 1986 and an MS in economics in 1989, both from Peking University, and his PhD in development economics from the department of agricultural and applied economics at the University of Wisconsin–Madison in 1996.
This paper empirically studies the roles of competence and incentive in affecting the performance of public officials. We aim at answering two questions: Does competence or incentive matter more for economic performance? Do they tend to substitute or complement for each other? Using a unique dataset of Chinese city officials for the period 1994-2011, we estimate each official’s relative level of competence to promote economic growth and identify the effects of incentive using age limits and political cycles for promotion. We find that both competence and incentive matter for officials’ economic performance, but competence explains more than incentive. In addition, incentive matters less for more competent officials. Our results show that competence is more important than incentive to affect politicians’ economic performance.