This study examines the private benefits enjoyed by political leaders of small jurisdictions in rural China, and the effect of democracy on these benefits. Village leaders in poor settings are often "big shots;" their position affords them social status, kickbacks and other gifts from citizens, the value of which may be large in aggregate. The extent to which democracy can mitigate these private gains by making leaders accountable to citizens is of great interest. This study examines the effects of local democracy by constructing a unique data set on social networks in Chinese villages. In the studied villages, major life events (births, weddings and funerals) are commemorated by large gatherings where gifts are exchanged, and their content is recorded in an account book held by the family. The research project digitizes these account books, spanning gifts given over the last 40 years, and reconstructs the history of the village social and gift network from them. Such detailed, accurate data on historical gift transfers in a poor setting, including to and from village leaders, is very rare to find. The main contribution of the research is to examine the effect of a democratic transition on informal authority. China instituted local elections in all villages between 1985 and 1995. By analyzing data on gifts received and given by politicians and leaders, it is possible to identify the effect of more democratic institutions on the informal power of village authorities. If the democratic transition creates a genuine shift in the source of authority of village leaders (from Communist Party to the citizens of the village), the flow of gifts to leaders should diminish, and leaders should reciprocate gifts further. The study tests whether local democratic institutions are successful in transferring some of leaders' informal power to citizens. In addition, the detailed gift record will allow an in-depth examination of the institutions of reciprocity and gift exchange in a poor rural setting.
How do high quality roads shape pathways into and out of poverty for the rural poor? How should policy-makers prioritize roads against other government expenditures, and how can they ensure that the rural roads they build have the greatest impact on the poor? There are surprisingly few clear answers to these questions that meet modern standards of evidence in the economics literature. Our research marshals new data sources to answer these questions in the context of an enormous rural road building program operating in India in the last ten years. A central structural feature of the lives of the poorest people in developing countries is that they live in rural areas characterized by an absence of high quality roads. This limits their ability to sell what they produce and their access to manufactured goods, as well as government services such as healthcare and education. In 2001 (the date of last measurement), over 150 million people in rural India lived in villages that were not accessible by paved road. While road infrastructure alone is clearly insufficient as a route out of poverty, our hypothesis is that it acts as a major barrier, not only to the progress of the poor, but to the ability of the government to deliver other essential services. We conducted a study of the impacts of India's enormous ongoing rural road building project (Pradhan Mantri Gram Sadak Yojana or PMGSY), which has built over 100,000 new high quality rural roads to previously unconnected villages, all over the last ten years.Taking advantage of very detailed data on progress in road construction, we connected PMGSY data to censuses of firms undertaken in 1998 and 2005, in order to understand how the quantity and industrial structure of non-farm employment changes with access to rural roads. We used two statistical methodologies (regression discontinuity and instrumental variables) to estimate the causal impact of roads on non-farm employment. Our preliminary results suggest that roads dramatically improve local non-farm economic prospects. Total employment in rural areas increases by over 50% in the five years after the construction of an new road. This growth is broad based and covers all important rural non-farm sectors, including retail and agro-processing. We also see significant growth in state-owned establishments, which include providers of government services, suggesting that high quality roads make it easier for governments to provide additional services to communities. These estimates suggest that roads are highly valuable in rural areas. It also may allay some of policy-makers concerns that roads will hasten outmigration from villages. While we do not yet have data on agricultural employment (which is where most rural people in India are employed), the growth in non-farm employment suggests that people will have one additional reason to remain in their villages. This work is ongoing. We will extend these estimates to examine the impact of roads on both urban-to-rural and rural-to-rural migration, agricultural choices and productivity and access to government services like electricity and education.
