Research Work

Crisis Control in Top-down Bureaucracy: Theory and Evidence from China's Zero-Covid Policy

This paper examines the compliance of local Chinese officials with the zero-Covid policy during the COVID-19 pandemic. By analyzing biographical data of political elites and a prefecture-day level dataset on risk levels – an index reflecting the intensity of epidemic prevention and control under the zero-Covid framework – we find that promotion incentives of prefecture leaders significantly influence their response time to COVID-19 outbreaks. Our empirical findings indicate that leaders with higher promotion prospects tend to overreact to emerging cases and maintain zero-Covid measures for extended periods even after outbreaks are under control. However, the intensity of zero-Covid measures can vary substantially among officials with higher promotion incentives.

We propose a theoretical model based on a multi-task agency framework to explain these phenomena. In this model, officials must balance crisis control and routine performance tasks. We categorize officials into two groups: those facing immediate promotion evaluations and those without evaluations or with distant deadlines. Furthermore, we consider the variation in resources available to local governors for crisis resolution. Our model predicts that officials with imminent promotion evaluations will act more radically in complying with the zero-Covid policy by escalating risk levels, which are visible to the central government but may not reflect stringent containment measu res. Among these high-incentive officials, governors with ample fiscal or governance resources will prioritize both economic growth and pandemic control, while those governing less developed prefectures will favor a “one size fits all” approach, implementing regional lockdowns to halt virus spread. Our empirical findings support and validate these theoretical predictions.

In our ongoing analysis, we anticipate uncovering how connections with provincial leaders and announcements of revised zero-Covid guidelines (as well as lockdown events in large cities) also impact prefecture leaders' pandemic response. Additionally, we are investigating the relationship between local political elites' promotion outcomes and their anti-pandemic performance.

Cost of Zero-Covid: Effects of Anti-contagious Policy on Labor Market Outcomes in China

We study the effect of China’s anti-contagious policy on labor market outcomes in 2020. By exploiting variation in the duration of the zero-Covid policy in China, which is triggered by the outbreak of new cases of COVID-19 in a 14-day observation window, we find that a 10% increase (3.7 days in average) in the duration of the zero-Covid policy caused the probability of unemployment to increase by around 0.1. Unlike most large economies that suffered a serious health shock from the COVID-19 pandemic, China effectively contained the scale and the spread of the initial outbreak in 2020. This provides a special empirical setting to examine the policy effect of anti-contagious policies, and we show that the disruption on the labor market majorly comes from the zero-Covid containment measures, while health shocks are trivial on the labor market outcomes. Moreover, the zero-Covid policy decreases the labor income and hours worked for employed individuals, and the policy effect is heterogeneous across demographic groups. We also examined the policy effect during different phases of the pandemic, and the results imply that the stringent clearance during the first stage of the pandemic (ended by Feb 17, 2020) caused the negative impacts on the labor outcomes, while the subsequent dynamic clearance strategy did not generate significant disruption on the labor market outcomes in 2020.