Political Career Concerns and Optimal Government Hierarchy

This proposed project is to study how political career concerns introduce new tradeoffs to the optimal design of an autocratic government's hierarchical structure.

An autocratic government, such as China, differs from a democratic one in that officials are not subject to electoral checks and balances. Hence a predominant part of these officials' incentives to work hard comes from their political career concerns (Li and Zhou, 2005; Xu, 2011), instead of from reelection pressure. The design of such a government's hierarchical structure therefore has to take into account whether there are adequate promotion opportunities to motivate lowrank officials to work hard. While there is a huge literature on federalism that studies the optimal level of decentralization in democratic governments, the omission of political career concerns renders this literature inadequate for the study of autocratic governments.

An autocratic government also differs from a commercial firm in that, when we consider what constitutes the payoff of a typical official, monetary payments probably pale in comparison with the opportunities to abuse power. The design of such a government's hierarchical structure therefore has to take into account the fact that the allocation of power across different offices directly affects officials' payoffs and incentives, and these effects cannot be easily counterbalanced by monetary payments. While there is a huge literature on hierarchical organizations that studies the optimal hierarchical structure of commercial firms, the overemphasis on monetary payments also renders this literature inadequate for the study of autocratic governments.

This proposed project is to develop a new theoretical framework for the study of an autocratic government's hierarchical structure. Our results will make policy debates surrounding, for example, China's optimal government hierarchy more informed. We expect at least one international refereed journal article and several conference/seminar presentations will be generated as a result of this proposed project.