Yanhong Jin, Maoyong Fan, Mingwang Cheng, and Qinghua Shi

Yanhong Jin is an associate professor in Department of Agricultural, Food and Resource Economics at Rutgers University. Maoyong Fan is an assistant professor of Economics at Ball State University. Mingwang Cheng is an associate professor in Department of Public Management at Tongji University in Shanghai, China. Qinghua Shi is a full professor in Antai College of Economics and Management in Shanghai Jiaotong University, China. Correspondence to be sent to yjin@aesop.rutgers.edu.

Abstract

Using nationally representative rural household panel data from 2003 through 2007 in China, we examine whether and through which channels cadre status enhances household earnings and how economic gain of cadre status vary by local economic development and income inequality. We find supporting evidence that rural cadres exploit political status for economic gain. Per capita income of cadre households is approximately 10-12 percent higher than that of non-cadre households. The cadre income premium is much larger and more significant in economically advanced regions than in less developed regions and in villages that exhibit higher income inequality than their counterparts. Rather through agriculture-related activities, the cadre income premium mainly comes from non-agricultural family business and employment, which can be explained by better access to credit markets and higher income from the village and the government than non-cadre households.