E2016011 September 2016
Xiangyu Shi∗, Tianyang Xi †
When political agents strategically compete with one another, neighborhood effects arise among them with regard to their performances. In this paper, we empirically examine the neighborhood effects in the context of political competition under the relative performance evaluation (RPE), using the regulation over coal mine safety in China as a case in point. We find that the safety performance of a prefecture city, measured by the number of disaster deaths, is positively associated with those of political neighbors, cities within the same province. However, such effect does not exist for geographical neighbors beyond provincial boundaries. Exploring city and provincial characteristics suggests that the neighborhood effects are stronger when cities or their political principals attach more importance to the level of coal mine safety. These results indicate that political competition can be instrumental for promoting government performance on “second-dimensional” policy issues.
JEL Classification: D73, H77, L51
Key Words: Neighborhood Effect, Relative Performance Evaluation, Workplace,Safety, China
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