Chinese local leaders are frequently moved across prefectures. By combining local leader rotation data and comprehensive firm land parcel purchase data across prefectures from 2006 to 2016, this paper examines how firm-politician connections affect resource allocation and finds that a firm headquartered in a leader's previous work prefecture purchases three times more land parcels in that leader's new governing prefecture than the prefecture-year mean, at half the unit prices. Identification is from within-firm-year variation in various prefectures through exogenous politician rotation. Land usage efficiency is lower for these follower firms' land parcels. Land allocation distortion is also economically sizable.
Nian, Yongwei, and Chunyang Wang.
"Go with the Politician."
American Economic Journal: Economic Policy,
Firm Behavior: Empirical Analysis
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
Political Economy and Comparative Economic Systems; Property Rights