The effects of institutionalization in China: A difference-in-differences analysis of the mandatory retirement age

摘要

This study takes advantage of a "natural experiment" to show how institutionalization shapes economic outcomes in China. Beijing introduced the mandatory retirement age for provincial leaders in the 1980s, but the rule was not enforced across all provinces until 2000. I use this window to construct a difference-in-differences design and show how the enforcement of mandatory retirement rule leads to better economic outcomes. Provincial leaders eligible for promotion are now motivated to perform better on growth in order to succeed under the performance-based promotion system. But this institution is not perfect, as it results in poorer performances among lame-duck leaders near the retirement age. I also find that leaders with central connection tend to have worse performances. This suggests that when politicians have connection with the center, they hold the key to promotion already, so they do not need to worry about the Chinese-style yardstick competition.