Work

Rotation, Performance Rewards and Property Rights

Year: 2025

Type: article

Abstract: Economic growth needs a strong and well-functioning government. But a government too strong can dominate private firms, leading to a holdup problem that is especially severe in autocracies. This paper studies how to constrain local officials in autocracies through personnel rules, with a special focus on rotation and performance-based evaluation. Through a game-theoretic model, I show that rotation or performance evaluation alone makes the holdup problem even worse. But it is exactly their combination that covers each other’s weakness and solves the holdup problem together. Firm-level panel data from China are consistent with the key predictions of the model.

Source: The Economic Journal

DOI: 10.1093/ej/ueaf126

Author: Weijia Li

Institution: Monash University

Language: English

Topic: Corruption and Economic Development

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $4,463