Assessing the Economic Premium of Communist Party Membership Open Access

Abstract

This study examines the economic premium of party membership after the shift to a market economy in China. Prior research has shown that party members enjoy a wage premium over non-party members, but the party membership effect may not be causal. Using panel data from the China Family Panel Studies, collected every other year from 2010 to 2018, this study finds that while party membership is associated with higher yearly incomes and greater household housing assets, the impact is not causal for both income and wealth measures. Instead, the income and wealth gap between party and non-party members can be attributed to individual characteristics. Specifically, the results from the OLS regression analysis, controlling for the year and income of the previous wave, suggest significant but decreasing effects of party membership. Also, party membership overall has a larger impact on wealth than income. Lastly, with a within-individual fixed-effects model controlling for individual heterogeneity, this study concludes that the impacts of party membership on income and wealth levels are no longer significant. These findings suggest that other factors beyond party membership play a more significant role in driving economic inequality in the market economy in China.

Table of Contents

Contents

1 Introduction 1

2 Background 4

2.1 Chinese Communist Party Recruitment................. 4

2.2 The New Class and Market Transition Theories . . . . . . . . . . . . 6

2.3 Career Mobility and Economic Returns................. 7

2.4 The Rise of Social Capital and Human Capital. . . . . . . . . . . . . 9

3 Data and Methodology 15

3.1 Data.................................... 15 

3.2 Outcome and Treatment Variables.................... 16 

3.3 Covariates................................. 16 

3.4 Models................................... 20

4 Results 24

4.1 Selection Estimates............................ 24 

4.2 OLS Regression Estimates ........................ 26 

4.3 Fixed-Effects Estimates.......................... 31 

4.4 Robustness Checks ............................ 33 

4.5 Housing Asset Estimates......................... 37

5 Discussion 42

Bibliography 46

About this Honors Thesis

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School	Emory College
Department	Quantitative Science
Degree	B.S.
Submission	Honors Thesis
Language	English
Research Field	Sociology, General Statistics
Keyword	Social Stratification Contemporary China Economic Inequality
Committee Chair / Thesis Advisor	Dr. Bin Xu, Emory University Dr. Weihua An, Emory University
Committee Members	Dr. Heeju Sohn, Emory University

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