Strong State, Weak Enforcement: Bureaucratic Forbearance of China's Social Insurance Policies (conditionally accepted at Political Science Research and Methods)
Why would a strong authoritarian state choose not to enforce its own policy? We extend the theory of forbearance to authoritarian regimes, highlighting its distinct incentives and characteristics. Using China’s social insurance policies as a case study, we argue that promotion-driven local officials, competing in selective political tournaments where advancement depends heavily on GDP performance, allow firms to evade payroll taxes in order to boost local economies and their own career prospects. This effect is most significant among domestic private firms and foreign firms. We conduct one of the first systematic analysis of firm-level social insurance contributions in an authoritarian context, supplemented by individual-level survey data. Our findings show that bureaucratic forbearance of China’s social insurance policies has a pro-business bias, undermining the policies originally designed to address inequalities during market reforms.
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