Addressing Multitasking Problems Through Promotion Incentives

This study builds a theoretical framework on how subnational governments use promotion schemes to motivate local bureaucrats to address conflicting tasks of economic development and environmental protection. We argue that subnational (province) governments can strategically allocate polluting industries to border areas to enjoy the benefits of economic development within their jurisdiction while shifting a portion of the pollution burden to the neighboring area, and use promotion incentives to make their subordinates (city leaders) comply. Hence, when the central government imposes a stricter environmental regulation policy on provincial governments, border-city leaders obtain a higher probability of promotion. Based on a panel dataset of leaders’ career information in China, we find an increase in promotion probability for border-city leaders after 2011 when the environmental protection emerged as a prominent political ideology for the ruling Chinese Communist Party. A potential channel is that border-city leaders accept the migration of polluting industries as a signal of compliance. Notably, this “border effect” for promotion is more prominent for newly appointed leaders who exhibit stronger political motivations and rely more on their superiors to get promoted