UC Berkeley

The enforcement of public policies is a critical aspect of governance that is significantly shaped by political and institutional forces. This dissertation studies the public policy enforcement in China, which features both strong state capacity and weak rule of law. Therefore, the relationship between the central and local government is particularly important in understanding public policy enforcement in this setting. Inspired by theoretical insights and the frontier literature in political economy and development economics, I employ reduced-form empirical methods to evaluate key features in China’s public policy enforcement. The three chapters of my dissertation discuss three different modes of public policy enforcements in China, each featuring varying roles of the central and local governments. The findings in this dissertation shed light on the complex dynamics of policy enforcement in China’s unique political and institutional context and have important implications for policymakers seeking to improve the effectiveness of governance.

Although the chapters are ordered to highlight the most important work from my doctoral study as Chapter 1, I would like to introduce the contents of each chapter in reverse order, beginning with Chapter 3 and ending with Chapter 1. The introduction starts with a discussion of the simplest mode of public policy enforcement, in which the central government dictates and vertically implements the policy, in Chapter 3. Moving to Chapter 2, the discussion explores the issue of incentives for local government officials, adding complexity to the enforcement model. Finally, in Chapter 1, the conflict between overlapping government hierarchies is analyzed. Overall, this dissertation presents a comprehensive examination of the challenges involved in public policy enforcement, with a focus on the role of government officials at different levels of the hierarchy.

Chapter 3 of this dissertation, which was co-authored with Chang Liu and Li-An Zhou and published in the Journal of Comparative Economics in 2020, evaluates the Universal Salt Iodization (USI) policy implemented in China in 1994. As the largest nutrition intervention policy in human history, the USI policy aimed to eliminate iodine deficiency diseases that could cause severe consequences on the cognitive abilities of future generations. Due to the central government's monopoly on salt production, distribution, and retail, the policy was effectively enforced vertically. To evaluate the policy's impact on children's later-life educational outcomes, we employed a difference-in-differences strategy to compare the educational outcomes of cohorts born before and after USI across counties with different iodine deficiency disorder levels based on population census data combined with county-level information. Our results demonstrate that the USI policy increased primary school enrollment by 0.6 percentage points and was more beneficial for girls and children born in rural areas. These findings further highlight the efficacy of public policies when enforced vertically by the central government.

Chapter 2 is coauthored with Qianmiao Chen, Chang Liu, and Peng Wang, and published in the European Journal of Political in 2022. This chapter examines a more prevalent model of policy enforcement in China, where the central government sets general policy targets, and local governments have considerable discretion in their implementation. We use Chinese governments’ crisis response to the COVID-19 pandemic as an example of such a model and investigate the role of local government leader’ career incentives in determining city-wide lockdown measures. At the onset of the pandemic, most local leaders hesitated to impose lockdowns as their promotions depended on achieving strong numbers for economic growth in their regions, which could be suppressed by such measures. However, when the nation’s top leader warned that local leaders who failed to control the disease would be removed from office, many rapidly implemented resolute measures. Nonetheless, our analysis reveals that local leaders with stronger promotion incentives were still more likely to downplay the virus by avoiding or minimizing lockdowns. The findings underscore how local politicians may be incentivized to act slowly during crises, undermining the central government's objectives in critical public policies.

Chapter 1 examines a complex scenario in which policy enforcement is limited by the conflict between overlapping government hierarchies, constraining the local governments’ ability in effective policy enforcement, even if they have strong incentives. To illustrate this point, I document a real-world example that Chinese central and provincial state-owned enterprises (SOEs) were exempted from local environmental regulations due to an institutional barrier. This exemption pushed local regulators to impose more stringent regulations on private firms. Using rich firm-level panel data and exploiting the decentralization of Chinese central and provincial SOEs, I investigate the direct and spillover effects of removing this regulatory constraint. The results show that polluting SOEs invest more in pollution abatement inputs that do not contribute directly to production, pollutes less, and have lower productivity when decentralized to the prefectural level. Furthermore, private firms in the same prefecture pollute more while increasing output and TFP, especially those with more binding financial constraints. At the aggregate level, decentralizing polluting SOEs in a prefecture reduces total emissions without significantly affecting total industrial output or aggregate productivity. When hypothetically reallocating 10% of emissions from central and provincial SOEs to private firms, I calculate total industrial output gains of 0.74–3.31%. This chapter highlights the significance of institutional interactions, particularly between central and local governments' policy targets, in shaping policy outcomes.