THE IMPACT OF THE ANTI-CORRUPTION CAMPAIGN ON INCOME DISTRIBUTION: EVIDENCE FROM CHINA

This paper provides the first systematic micro-level evidences on the effectiveness of anti-corruption campaign in disciplining public officials and its impact on income distribution. Based on China Household Income Project (CHIP) survey data 2007 and 2013, we found that party and government officials had significant hidden income and the public-private earnings gap was as high as 8% before the campaign. However, the hidden income become not significant and the earnings gap declined to -18% in this post-campaign period. The regions inspected by central anti-corruption inspection groups experience larger public earnings penalties compared to the other regions. Overall, our findings suggest that the privilege of public officials declined sharply during this anti-corruption campaign.