Corruption, Anticorruption, and Inter-County Income Disparity in China

Yiping Wu 

Department of Industrial Economics

Zhejiang University of Finance and Economics

18 Xueyuan Street, Hangzhou 310018, CHINA

Jiangnan Zhu

Department of Political Science

University of Nevada, Reno

1664 North Virginia St.

Abstract

The rapid economic growth in China has been correlated with a large income gap across regions. While most existing research has focused on economic factors to explain the problem, we argue that local government’s anticorruption endeavor also plays a very significant role in influencing local income level. Recent research shows corruption undermines economic growth and generates poverty, we therefore hypothesize that government anticorruption measures should increase local income level. Using county level data and Ordinary Least Square estimates (OLS), we find counties with higher degree of anticorruption tend to have higher income measured by county-level per capita GDP. We also employ a recently developed Shapley value decomposition technique to quantify the contributions of each variable. We found that anticorruption plays a large role in explaining inter-county income disparity in China.

Key Words: Corruption, Anticorruption, Income Disparity, County, China,