Transformation of Government Performance Management System and Coordinated Urban-Rural Development in China
The predominance of GDP growth as a goal in China's government performance management system has cast certain unfavorable impacts on high-quality socioeconomic development and shared prosperity.Since the 18th CPC Na-tional Congress,the Chinese government has repeatedly proposed to abolish"GDPism"and attach importance to high-quality development and coordinated urban-rural development.To eradicate the dominance of"GDPism"and facilitate transformation,the superior government has eliminated the inclusion of the GDP index in the performance management system across 495 counties.This paper constructs a multi-task principal-agent model to show that after"GDPism"is abolished in the government performance management system,the local governments at the county level tend to reallocate their resources and efforts to the remaining goals in the system,especially to those where strong incentives are newly added after the transformation.Based on the county-level panel data from 2008 to 2019,this paper employs a difference-in-differences approach to evaluate the impacts of government performance management transformation on the urban-rural income gap.The find-ings indicate that the performance management transformation can significantly promote coordinated urban-rural develop-ment.Specifically,compared to counties without the transformation,the treated counties'urban-rural income ratios are 0.0413 smaller on average.The heterogeneity analysis of the different types of newly added incentives shows that the shrinking effects of the transformation on the urban-rural income ratio are stronger when the newly added incentives are more related to rural development.These results are consistent with the conclusions predicted by the multi-task principal-agent model.This paper further studies the mechanism by which performance management transformation contributes to the re-duction of the urban-rural income gap.At the macro level,the transformation makes county governments put more effort into rural residents'income growth.Specifically,after the government performance management transformation is per-formed,the county governments tend to increase social assistance expenditure,develop agriculture,improve agricultural labor productivity and increase land transfer in rural areas.All these efforts can be seen as corrections to"GDPism"and can benefit more rural residents'income growth.At the micro level,in counties with the government performance man-agement transformation,rural households have a larger ratio of wage in their total income and individuals show higher probabilities of attending non-household and non-agricultural works.The contributions of this paper lie in the following aspects.First,as a study to evaluate the impact of government performance management transformation on coordinated urban-rural development,this paper offers both theoretical de-duction and empirical evidence through the multi-task principal-agent model and difference-in-differences design.Sec-ond,this paper pays attention to the impacts of the establishment of new strong incentives on coordinated urban-rural de-velopment after the performance management transformation.Third,this paper further explores the transmission mecha-nism of the impacts of performance management transformation on the urban-rural income gap.Fourth,this paper pro-vides some practical policy implications.The government performance management transformation can correct the dis-torted phenomenon of one-sided emphasis on economic growth in the old development model and provide conditions for the redistribution of local government's efforts to fulfill coordinated urban-rural development.
GDPismPerformance Management TransformationMulti-task Principal-agent ModelUrban-Rural Income Gap