Informed Enforcement: Lessons from Pollution Monitoring in China

Abstract

Government regulations are often imperfectly enforced by public officials. In this study, we exploit the introduction of air pollution monitors in China to investigate whether real-time monitoring of policy outcomes affects the enforcement of existing regulations. Using assignment criteria established by the central government and new georeferenced data on local enforcement activities, we show that monitoring (i) increases enforcement against local firms, (ii) improves the targeting of enforcement, and (iii) reduces aggregate pollution. These effects are driven by officials facing performance incentives and are stronger when there is limited scope for data manipulation, suggesting that real-time monitoring improves top-down accountability. (JEL K32, L51, O13, P25, P28, Q52, Q53)