Economic compensation for elite dismissals in authoritarian regimes: Evidence from Chinese provincial officials

Abstract

Personnel dismissals of high-ranking elites in authoritarian regimes are ubiquitous. However, the consequences of these events have not been thoroughly examined. This study explores the economic consequences of political dismissals in China, one of the most durable authoritarian regimes in the world. In the face of dismissals, a regime's concern lies in ensuring that the dismissed officials do not cause antiregime sentiments toward the public. Therefore, the regime is willing to preempt the possibility by enhancing the state–public relationship. To realize this cooperation, the regime distributes economic benefits to the public. The satisfied public is unlikely to support the dismissed elites against the regime. By examining the government spending data of China's provinces, this paper demonstrates that the Chinese government compensates the local public by increasing government expenditures in the locality that has recently experienced a dismissal of one of its high-ranking officials.