John W. Kendrick Seminar Room
Room 321 at 2115 G Street NW
Washington, DC 20052
Yao Pan (Aalto University)
“Aladdin’s Lamp Unleashed: Successful Social Programs over Local Political Cycles”
Abstract: A social program can achieve great success in one case but not in another, and the reason is far from clear. This paper tests a new hypothesis that timing of program introduction relative to local political cycle greatly affects a program’s impact, using a government-implemented village fund program in China. Combining household-level panel data from a random experiment on loan provision and the exogenous variation in the timing of the program introduction relative to the village Party secretary’s reselection cycle, we show that the program achieves a higher loan take-up rate, better poor targeting, fewer violations, and a higher overall performance score if it is introduced in the year prior to reappointment. These divergencies are most likely driven by differences in effort levels the village fund committees put into the program and in loan terms set by them. Finally, we show villages with the program introduced in the year prior to reappointment experience higher levels of agricultural income, agricultural production assets, and food consumption. Taken together, these results signify the importance of politician’ incentives for successful social program implementation.