Events

Professor Raymond Fisman
Slater Family Professor in Behavioral Economics
Boston University

Bureaucratic decentralization involves tradeoffs between local expertise versus access to centralized resources. We study the First Secretary Program (FSP), which consigned officials from higher level agencies to implement antipoverty initiatives in impoverished Chinese villages, with the objective of connecting communities to expertise in higher-level governments, while also ensuring localized implementation. Focusing on the 1,844 villages in a prefecture-level city and exploiting the program’s staggered rollout, we use a generalized difference-in-differences design to evaluate the program’seffects. We show that the FSP increased village in comes by 2.5 percent; emphasizing the importance of accessing resources from higher-level agencies, the benefits appear for villages paired with city or provincial agencies, but not for (lower-level) township ones. Our granular data allow us to explore the sources of these improvements, which are primarily derived from income from village-level cooperative projects. We offer tentative evidence that improved returns come from better project management rather than project selection. Our findings indicate the potential for a less stark trade-off in bureaucratic design via “mixed decentralization.”