Information transparency, monitoring, and incentives under decentralization: Evidence from China's fiscal reform of “province managing county”
利用2000-2009年中国590个县的数据，研究发现2004/2005年“省直管县”改革消除了省县间的信息障碍，使改革省份的县采取更积极的财政政策，在经济增长的政治竞争中受到更强激励，且这种效应在竞争同行较少或经济增长排名高低的县中更显著。
Abstract Monitoring is deemed crucial for the incentivization of a decentralized organization, but its function relies on information transparency between the central authority and the delegated individuals. We test this hypothesis by considering changes in the fiscal behavior of Chinese county governments following an exogenous fiscal reform in 2004/2005 that removed information obstacles between provinces and counties. Employing data on 590 Chinese counties from 2000 to 2009, we find that counties in the reform provinces adopt a more proactive fiscal policy after the reform, suggesting that they become more incentivized in the political competition for economic growth. Such effects are stronger in counties with fewer competing peers and counties with either high or low ranks in the records of economic growth among peers. The increase in counties' productive spending leads to higher economic growth in later years.