Leadership vacuum and urban economic development: Evidence from a transition country

Abstract

This study focuses on the impact of municipal government officials’ vacancies on the economic development of their cities. Using manually collected data on unfilled senior governmental positions measured by the absence of municipal party secretaries in China from 2003 to 2019, we find that these absences limit city economic development. We identify two possible channels through which this happens: government efficiency and economic policy uncertainty. Finally, we show that the impact of these vacancies on city economic development is stronger in cities in which there is greater pressure to promote government officials and in less developed cities. Thus, this study offers new evidence that vacancies in city government undermine that city's economic development, particularly in a country undergoing an economic transition.