Window dressing in the public sector: Evidence from China’s compulsory education promotion program

We analyze the window-dressing behavior of China’s local governments throughout the 1990s, when they were required to fulfill compulsory education targets imposed by the central government. County officials faced severe negative career consequences if they failed to fulfill these targets. We found that county-level education expenditures increased progressively as the pre-specified inspection period drew near but decreased dramatically after the inspection. This phenomenon was interpreted as evidence of the window-dressing behavior of county governments. Further analysis suggests that local officials with longer tenure and who were thus closer to promotion evaluations tended to engage in more aggressively window-dressing. Window-dressing behavior generates real consequences for school-age teenagers: those exposed to local governments’ window-dressing behavior recorded considerably lower junior high school graduation rates and poorer labor market outcomes later in life.