Li Han Job Market Paper Marketing Politics? Economic Reforms and the Selection of Political Elites in China November 15, 2007 Abstract: Many argue that economic liberalization, by reducing the extent to which an autocrat can directly control economic resources, induces democratization. This paper suggests that in post-reform China the composition of the ruling Communist Party membership altered in such a way so as to keep political and economic control aligned. National survey data shows that membership increased more among educated individuals with greater private-sector opportunities. Exploiting exogenous variation in college graduates' labor-market outside options, I find evidence that such a change is mainly driven by the Party's increased demand for educated individuals working in the growing private sector. Such a strategy of co-opting new economic elite could help increase the Party's survival probability and strengthen its commitment to economic reforms. Research Papers The Gender Difference of Peer Influence in Higher Education (with Tao Li), accepted by Economics of Education Review, October 2007 Abstract: Investigations of the existence of residential peer effects in higher education have shown mixed results. Using data from a Chinese college, where roommates are exogenously assigned and live with each other for four years, we find no evidence of robust residential peer effects. We find strong evidence that females respond to peer influences whereas males do not, consistent with social psychology theories that females are more influenced by peers. Redistribution and Population Size in China (with Filipe Campante and Quoc-Ann Do), October 2007 Abstract: This paper investigates village level policies in China through the theoretical lenses of Campante Do (2006), wherefrom it predicts a positive relationship between population size and the progressivity of village taxation. Moreover, this effect should be dampened by the democratization of certain villages. These effects work in a political economy model where absolute number of dissidents matter to redistributive policies. We analyze a unique dataset of village taxes per household, and of elections (competitive or not) of village heads, using Blundell-Bond's 1998 method to address issues of weakly exogenous errors and highly persistent variables (such as population) in a dynamic panel. We find strong, robust empirical evidence supporting the predictions of our theory. Empowerment or not? Village Elections and Local Governance in an Authoritarian Hierarchy: Evidence from China (Draft available by December 2007) Abstract: This paper investigates how the implementation of village elections in China affects local political power sharing and local governance. Exploiting exogenous variations in the timing of implementation, I find that elected village officials are less likely to be the ruling communist party members. As political participation increases, village officials are less predatory in taxing peasants and less corrupt in spending public money. However, there is no robust evidence on income redistribution and improved public goods provision. The empirical evidence suggests that village election only serves a limited role. It is mainly used by the central government as a device to discipline corrupt local officials rather than commitment to redistribution. The Capture of Personnel Control and Incentive Pay in Rural China: Evidence from School Finance Centralization Reform (With Xuehui An and Mingxing Liu, draft available by December 2007) Abstract: This paper aims to evaluate the impact of national transfer program on rural school finance and governance in China. Using data from Gansu, we find that overall school finance increases and teachers are paid better after the program is implemented. However, we also find evidence that the control power over teacher hire is more likely to be usurped by the county officials in charge of the fund allocation. Because these officials have strong incentives to seek rent through hiring unqualified teachers, when they control teacher hire, teacher incentive pay scheme falls apart; new teacher quality, old teacher effort, and student performance all decline despite the increase in school funding. When the school districts successfully manage to retain the control over teacher hire, the incentive pay scheme, new teacher quality, incumbent teacher effort, and student performance all remain as good as before. We address the endogeneity problem through difference-in-difference estimates and through instrumenting the ability of the county officials to usurp the control over teacher hire.