Effect of Political Capital on Socioeconomic Attainment in China Evidence from China Family Panel Studies
Previous studies within the market transition debate find evidence both consistent and inconsistent with the predictions of Nee's market transition theory: evidence of both increasing return to human capital and persistent return to political capital after the market transition in China. The inconsistency between the findings and the theory can be reconciled by the changing selection mechanism of party members of the Chinese Communist Party, which increasingly emphasizes the human capital of candidates. This study explores the extent to which education and cognitive skill, representing different aspects of the human capital embedded in the selection mechanism of party members, account for the contribution of party membership to income and housing space in China and the relative effects of the two human capital measures. Key findings include: 1. Both education and cognitive skill to a large extent account for the contribution of party membership to income and housing space. The effects of both human capital measures are stronger in rural areas than in urban areas. 2. Education in general has larger effect, but cognitive skill has larger effect on accounting for party membership's contribution to rural income. 3. Controlling for marketization level considerably lessens the degree to which both human capital measures account for the contribution of party membership. These findings provide support for the market transition theory with data three decades after the transition and help to illuminate the effect of cognitive skill on the socioeconomic attainments of Chinese adults. Introduction Nee's market transition theory predicts that China's market transition will result in a decreasing role of political capital and increasing importance of human capital in processes of socioeconomic attainment (Nee 1989) This theory has stimulated a large volume of studies, but the empirical findings from those studies have been mixed (Bian 2002; Keister and Borelli 2012) Researchers found evidence of increasing return to human capital as well as evidence of a persistent role of political capital in socioeconomic attainment determination after the market reform in China. These mixed findings may be reconciled by the changing selection mechanism of communist party members in China that increasingly emphasizes the human capital of candidates as a criterion for being a party member (Walder 1995; Bian, Shu, and Logan 2001; Appleton et al. 2009) Some studies suggest that in addition to education, cognitive skill is part of the human capital associated with higher probability of being a party member after the market reform (Xie and Hannum 1996; Gerber 2000; Gerber 2001; Huang, Xie, and Xu 2015) If human capital is part of the credentials for being a party member, then party membership does not only