Discussion Paper No. 929

DECOMPOSING THE EFFECTOF HEIGHT ON INCOME IN CHINA:
THE ROLE OF MARKETAND POLITICAL CHANNELS
Eiji Yamamura
Russell Smyth
Yan Zhang

March 2015

The Institute of Social and Economic Research
Osaka University
6-1 Mihogaoka, Ibaraki, Osaka 567-0047, Japan

Decomposing the effect of height on income in
China: The role of market and political channels
Eiji Yamamura∗

Seinan Gakuin University, Japan

Russell SmythMonash University, Australia

Yan Zhang

Fukuoka Women’s University, Japan*Corresponding author. Department of Economics, Seinan Gakuin University, 6-2-92
Nishijin, Sawara-ku Fukuoka 814-8511, Japan.
E-mail address: yamaei@seinan-gu.ac.jp
Tel: +81 92 823 4543; Fax: +81 92 823 2506

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ABSTRACT
It is well known that height is positively associated with earnings. Based on
individual level data, this paper investigates the channels through which height
influences income in China. Our first key finding is that taller people are more
likely to become members of the Communist Party, resulting in an increase in theirincome level. We label this the height premium in earnings through the politicalchannel. Second, controlling for the political channel of the height premium, heightis positively associated with income in the labor market. We label this the heightpremium through the market channel. Third, the height premium in earnings
through the market channel is larger than that through the political channel.

JEL classification: J08; J24; P26
Keywords: Labor market, China, Height, Communist membership.

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1. Introduction
It is widely acknowledged that human capital, accumulated through education andexperience, is positively correlated with income in a market economy. In addition,
an increasing number of studies suggest that individuals’ physical characteristics
are related to economic returns 1. One key physical characteristic is height, which
has attracted much attention among researchers 2. Existing studies have exploredthe role played by height in the labor market and found a height-wage premium indeveloped Western countries (Schultz 2002; Heineck 2005, 2009; Case & Paxson
2008, 2009; Kortt & Leigh 2010). The height-wage premium has also been observedin China (Gao & Smyth 2010) 3. Height reflects the degree of investment in healthhuman capital, which improves performance in the labor market.
The contribution of individual ability and skill to the wage premium can be
expected to vary under different institutional conditions and, in particular, between
market and non-market economies. Our contribution is to analyze the height-wage
premium in China by paying particular attention to the institutional setting.
Specifically, we consider the role of alternative channels, which we label market andpolitical channels, in contributing to the height-wage premium. In China, the rapid
development of the market has been an outgrowth of economic reform. Hence, one
reason why health human capital, reflected in height, has been important inincreasing earnings might be that human capital plays an important role in themarket economy (Li 2003). We call this the market channel. However, in China, notonly human capital but also political capital should be taken into account when
considering the factors that contribute to economic success (Bian et al. 2001; Liu,
2003; Li et al. 2007). Communist Party members have been found to earn higher
wages in China (e.g. Appleton et al. 2005; Bishop & Liu 2008). We define thepolitical channel as the potential height-wage premium that accrues if taller people
are more likely to become members of the Chinese Communist Party.
A natural question to ask is how is height is evaluated in terms of politics? Ifheight is positively regarded not only in the “labor market” but also in the “politicalmarket”, the height premium in earnings may be generated indirectly through the
1 Previous studies provide evidence of the beauty premium in the labor market (e.g.
Hamermesh and Biddle 1994; Biddle & Hamermesh 1998; Borland & Leigh, 2014;
Hamermesh et al., 2002).
2 Weight is also observed to affect wage levels (Brunello & D’hombres, 2007; Shimokawa
2008).
3 Other studies have examined the relationship between height and living standards in
China (Morgan 2000; 2004) and the role of height in dating in China (Ong, 2014).

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political channel. We attempt to assess whether height is related to earnings
through the political channel and the relative role of the market and politicalchannels.

We find that height is positively related to income, not only through themarket channel but also through political channel. The association via the market
channel, though, is overwhelmingly larger than that through the political channel.
The rest of this paper is organized as follows. In Section 2, the Chinese context
and existing literature is reviewed. Section 3 proposes several testable hypotheses.
Section 4 provides an overview of the data and empirical method. Section 5 presents,
and discusses, the major findings.

The last section concludes.

2. Chinese context and existing literature
The Chinese Communist Party maintained a high level of control over the wage andpromotion structure prior to the market reform period (Groves et al., 1995). In theplanning period, members of the Communist Party benefited from better entry-leveljobs and career paths (Walder, 1995).

In the market reform period, beginning in

the 1980s in urban areas, the Communist Party relaxed its formal control over the
allocation of labor and wage setting is now more flexible. Enterprises, even in thestate sector, now have much more managerial autonomy and wages and promotion
are more closely linked to performance and productivity. Moreover, the operation ofmarket forces has been entrenched through a withering of the state-owned sector
and a rapid expansion of the private sector. The private sector, broadly defined toinclude firms with foreign capital, accounted for just under three quarters ofindustrial output in 2011. At the same time, the state-owned share of industrial
output was 26% in 2011, compared with almost 80% in 1979 (Lardy, 2014).
The screening criteria for Party membership have changed over time (Han,2007). Prior to the market reform period, the primary criteria for Party membership
was loyalty to the Party and class origin. In the market reform period, andparticularly since the 1990s, ability has become the most important criteria withmuch more emphasis placed on education (Appleton et al. 2009). In 1990 less than
1% of Party members were college students. By 2005, this figure had increased to
8% with one quarter of all new members being college students (Han, 2007). At thesame time, the importance of class origin, as a screening criteria, has declined overtime. Walder (1995) and Li and Walder (2001) argue that the Party seeks out
individuals with high ability and rewards them through the market mechanism as
part of a strategy to enable it to maintain its stranglehold on political power.

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Our study is related to at least four strands of literature on the Chinese economic
and political landscape. The first is studies examining the determinants of who
becomes a Party member (Bishop & Liu, 2008; Han, 2007). The second is studies
examining the economic returns to being a Party member (see eg. Appleton et al.,2009; Bishop & Liu, 2008; Lam, 2003; Li et al., 2007; Liu, 2003). The third is studies
examining the changing role of Party membership in obtaining elite occupations
and other benefits (Li & Walder, 2001; Walder, 1995). The fourth is studies
examining the economic returns to physical appearance in the Chinese labormarket, including height (Gao & Smyth, 2010) and weight (Shimokawa, 2008).
There are no studies examining the relative importance of the market and politicalchannels influencing the height-wage premium. We consider the role of height as ascreening criteria for Party membership, in effect proxying for unobservable ability,
and the direct and indirect economic returns to height in the labor market.

3. Hypotheses
The Party uses height as a screening device to attract talented individuals. Bishop
and Liu (2008) found that the Party acts as a screening device to identify less welleducated, but high ability, individuals. The problem is that innate ability isunobservable. Height captures unobserved characteristics such as innate ability.
Several studies conclude that height is a good proxy for cognitive ability and thatthe association between height and cognitive ability persists through life (see eg.
Case & Paxson, 2008). Clearly height is a marker for political success. Persico et al.
(2004) reported that Presidents of the United States are inclined to be taller than
the average American population and that taller candidates tend to win
Presidential elections. It is reasonable to think that taller people use Party
membership to derive economic rents. Height is a proxy for ability and it is in theinterests of the Party to reward Party members of high ability for their loyalty
through the market (Walder, 1995). In China, the increasing acceptance of income
inequality may make it easier for Party members to convert their political power
into economic power, allowing them to earn higher income (Bishop & Liu 2008).
Party members of high ability, proxied by height, are best placed to convert politicalpower into economic power in the market. This suggests the following hypothesis:

Hypothesis 1: Height and income are positively correlated via the political channel
We now turn to why height is rewarded in the market independent of any
5possible political channel. First, taller people tend to be stronger and, hence, can be
expected to be more productive, particularly in jobs involving physical labor(Lundborg et al., 2014). This can be especially important in many sectors indeveloping countries, such as China. Second, as discussed above, height isassociated with cognitive ability, which can be expected to be rewarded in themarket (Case & Paxson, 2008). Third, height in adulthood depends on height inadolescence. Persico et al. (2004) argues that individuals who are taller duringadolescence are better able to accumulate human capital in adolescence and this isrewarded in later life in the labor market. Fourth, taller people may have higher
self-esteem or exude more self-confidence. This may allow them to communicate
with colleagues better and, hence, make them more productive. Similarly, taller
people may be better negotiators and thus better able to negotiate higher salaries
with employers in the labor market. These arguments suggest the hypothesis:

Hypothesis 2: Height and income are positively correlated via the market channel
Next, we consider the relative strength of the relationship between heightand income for males and females. We conjecture that the relative strength of therelationship between height and income will be more important for males thanfemales. First, as discussed above, height is likely to be correlated with productivity
in jobs involving physical labor. Males will tend to be disproportionately
represented in physically demanding jobs, suggesting the height-wage premium
will be larger for males. Second, height is correlated with dominant personality
traits that are rewarded in the market. Evolutionary psychology suggests that theseare more important for males than females (Blaker et al., 2013).

Hypothesis 3. The positive correlation between height and income via both market
and political channels will be stronger for males than females.
There has been an expansion of market forces over the reform period. The
economic reforms have created a ‘space’ in which markets have flourished andwages are flexible. One would expect that in such an environment human capitaland physical characteristics would have a significant influence on economic returns.
The evidence suggests it does. Returns to human capital have increased over themarket reform period (Gao & Smyth, 2015). Studies have identified that physicalappearance captured by beauty (Hamermesh et al., 2002), height (Gao & Smyth, 2010)6and weight (Shimokawa, 2008) earn economic rents/penalties. While the market has

increased in importance in the allocation of resources, the wage premium frombeing a Party member has not declined. On the contrary, the evidence from existingstudies is that it has increased (Appleton et al., 2009; Bishop & Liu, 2008).
The effect of the market channel on height, however, is direct, while theeffect of the political channel on height is indirect via political influence. Therefore,
while we expect both political and market channels to positively influence theheight-wage premium, the direct effect of the market channel can be expected tohave increased relative to the indirect effect of the political channel. This reflects
the fact that the Party has reduced its formal role in the allocation of resources (atthe expenses of the market) and that while this is extensive, its influence is more
subtle. Thus, we expect the market channel to be larger, suggesting the hypothesis:

Hypothesis 4. The effect of height on income via the market channel will be larger
than the effect of height on income via the political channel.

4. Data and methods

4.1. Data

We use data from the Chinese General Social Survey 2008 (CGSS 2008) collected by
the Department of Sociology, Renmin University of China, Beijing in 2008 4. CGSS
2008 was a nationally representative survey, administered in 27 provinces, collected
between September and December 2008. All respondents are Chinese with an urban

hukou (household registration) and are aged 18 and above. The data were collected
via face-to-face interview, in which the questionnaires were filled in by theinterviewers. The initial sample size was 6000, but the number of observations usedin this study was reduced to 3581 once missing observations were removed 5.
The GGSS 2008 contains information regarding basic socioeconomic individual
characteristics such as age, gender, household income, occupation, ownership form of
employer, years of schooling, marital status, family members and province of residence.
Importantly, in terms of our research question, the dataset also contains information on
the respondent’s height, whether the respondent is a member of the Communist Party,
The CGSS 2008 has been conducted as a part of the East Asian Social Survey 2008 (EASS
2008) project. EASS 2008 was designed to contribute to the broader provision of
Cross-National Survey Data Sets concerning "Culture and Globalization in East Asia".
Other datasets in the same series are the Japanese General Social Survey (JGSS), Korean
General Social Survey (KGSS) and Taiwan Social Change Survey (TSCS).
5
See Bian and Li (2012) for details on sample design, data collection and quality control in
the CGSS.
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and if his (her) father and mother is a member of the Communist Party. The great
advantage of the dataset is that it allows us to assess not only effect of respondent’s
height and Communist membership, but also that of parent’s Party membership.
Table 1 shows the definitions of variables used in this paper and their basic
statistics, such as mean value, standard deviation, maximum and minimum values.
Apart from these variables, as discussed below, various control variables are included in
the empirical specification, but the results for these variables are not reported toconserve space. Hence, information about control variables is omitted in Table 1. We see from Table 1 that the mean value for Male is 0.48, indicating that the
sample almost equally consists of males and females. Mean values of Party, Father

Party and Mother Party are 0.11, 0.13, and 0.02, respectively. This suggests that 11 % of
respondents are Communist Party members, 13% of respondents’ fathers are
Communist Party members and that 2% of respondents’ mothers are Party members.
Therefore, the number of male Party members in the sample is approximately five times
larger than that of the number of female members. Accordingly, compared with females,
males can be considered to have a political advantage in terms of pursuing institutional
rents by virtue of being members of the Communist Party.

Table 2 shows the difference in income between Communist Party members andnon-members. Based on the full sample, income of members is higher by 9800 RMB
than that of non-members and this difference is statistically significant at the 1 %level. If the sample is restricted to males, the difference in income is 7900 RMB,
while for the female sample the difference in income is 9500 RMB. Hence, thedifference in income between Communist members and non-members is larger for
females than for males. This implies that Communist Party membership plays agreater role in increasing income for females than for males (assuming all otherthings equal). Table 2 also shows the difference in income between male and female
Communist Party members and the corresponding difference for non-members. It isinteresting to observe that there is no statistical difference in income between maleand female Communist members, while for non-members the income of males is5900 RMB higher than for females, which is statistically significant at the 1 % level.
All in all, the difference in income between males and females is smaller than the
difference in income between members and non-members. That is, in China,
Communist Party membership plays a more important role in contributing todifferences in income levels than gender differences.
Figures 1 (a) and (b) illustrate the relationship between height and income formales and females. A positive relationship is observed in Figures 1(a) and (b),8indicating a height premium in earnings for males as well as females. This is in linewith previous findings for China reported in Gao and Smyth (2010).
Table 3 shows differences in height between Communist Party members andnon-members. We see from Table 3 that, based on the full sample, the height ofCommunist Party members is higher by 4.2 centimeters (cm) than that ofnon-members and the difference is statistically significant at the 1% level. Even
after dividing the sample into males and females, the height of members is higher
than non-members for males and females. The differences are 1.2 cm and 1.7cm formales and females, respectively. Figures 2 (a) and (b) illustrate the relationshipbetween height and Party membership for males and females. We observe a positive
relationship in Figures 2 (a) and (b), implying that the taller people are, the morethey are likely to be a member. It follows from Table 3 and Figures 2(a) and (b) that
there is a height premium for being a Communist Party member.

4.2. Methods
In order to assess the channels through which height has an effect on income, we
adopt the following approach. In the first step, a probit model is used to ascertain
the determinants of being a Communist Party member. We examine the relation
between height and membership. The estimated function takes the form as below:

Party i =α0 + α1Height i + α2 Father Party i + α3 Mother Party i + α4Schooling i +α5Age i + α6 Age squared i + α7Male i+ Y’ iBi + u i,where Party i represents the dependent variable for individual i. The main
independent variables are shown in the function. From our argument thus far, thecoefficient of Height is expected to have a positive sign. Appleton et al. (2009)
argued: “The Party looks for recruits who are committed to its values and will
participate actively in politics” (Appleton et al. 2008, 260). If one’s parents are
members of the Party, this is a key leading indicator. Thus, parental membership of
the Communist Party is an indicator of loyalty and sound class background(Appleton et al. 2008). The coefficients on Father Party and Mother Party are
expected to have a positive sign. If this proves to be correct, political advantage canbe considered to be inherited from generation to generation. Schooling is included todetermine the extent to which human capital, through education, plays a role in“the political market”. The predicted sign of Schooling is positive. Further, basic
demographic factors are taken into account by including age and gender. Apart from9

these variables, the vectors of the control variables are denoted by Y i. These control
variables are residential province dummies, health status dummies, dummies forlocation of the school from which respondents graduated, dummies for number of family
members, occupation dummies, dummies for ownership form of employer and marital
status dummies. The regression parameters are denoted by α, and B is the vector of

the regression parameters for the control variables. The error term is denoted by u.
The empirical specification follows the model employed by Appleton et al. (2009) toexamine the determinants of Communist Party membership.
In the second step, we investigate the determinants of annual income level 6.
Income of some respondents is zero, representing left-censored observations. In
these circumstances the Tobit model is suitable and is so used for estimation 7. The
estimated function takes a similar form to that used in the first step estimation 8:

Income i =β0 +β1 Party i +β2 Height i +β3 Father Party i +β4 Mother Party i+β5Schooling i +β6Age i +β7 Age squared i +β8Male i+ Z’ iCi + e i,
In addition to the set of independent variables used in the first step estimation(probit model), Party is included to examine the association between income andparty membership, which captures political influence on income. Considering theresults for Height in the probt and Tobit estimation allows us to assess the heightpremium on income through the political channel. Since, in the Tobit estimation,
the effect of height on income via the political channel is controlled by including

Party, the result for Height in the Tobit model captures the effect of height via themarket channel. As for other control variables, most of them are widely used in the
Using hourly wages is preferable to income (Li, 2003). However, hourly wage cannot be
obtained from CGSS 2008 and so annual income level is used. Annual income has been
employed as the dependent variable in related studies, such as Bishop and Liu (2008).
7 In the existing literature, the logarithm of hourly wage (or income) is used as thedependent variable. However, respondents reporting no income would need to be deleted
from the sample if we used that approach in this paper. This leads to selection bias.
Therefore, we do not use logarithm of income in this paper. Instead of using logarithm ofincome, the semi-elasticity (d(lny)/d(x)), is numerically calculated after estimation.
8 There is an argument that the Communist Party seeks to recruit economically productive
members (Appleton et al. 2009). Hence, people with higher earnings are possibly likely to be
Communist Party members. If this holds true, causality between income and Party
membership is ambiguous, resulting in problems of endogeneity bias. There is an argumentthat “parental membership is likely to be correlated with own membership… [but] parental
membership may not have a strong direct effect on own wages” (Appleton et al. 2009, 266).
Following this argument, we used parental membership dummies (Father member andMother member) as exogenous instruments for Party to conduct 2SLS estimation. However,results of the endogeneity test for Party did not suggest that Party is an endogenous
variable in any estimations (as is reported in Tables 4-6). Therefore, Party is treated as an
exogenous variable in the Tobit estimation. This is the reason why the probit estimation andTobit estimation are conducted separately.
6

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existing literature when considering determinants of wage or income (e.g. Appleton
et al., 2005, 2009; Bishop and Liu 2008; Gao and Smyth 2010, 2015).
We use the full sample in order to test Hypotheses 1 and 2 proposed in Section 3.
We divide the sample into males and females to test Hypotheses 3 and 4

5. Results and discussion
The regression estimates for both the probit and Tobit specifications are reported inTables 4-6. Results based on the full sample are presented in Table 4. After dividing
the sample into males and females, results based on the male sample are presented
in Table 5, while those based on the female sample are presented in Table 6. In each
Table, results for the probit model are shown in column (1), while those for the Tobit
model are in column (2). In the probit estimation, values without parentheses show
the marginal effect, indicating the change in probability of being a Communist
Party member when the independent variable increases by one point. In the Tobit
estimation, values without parentheses 9 show the change in the logarithm ofincome when the independent variable increases by one point.
First, we begin by interpreting the results in Table 4. Consistent withexpectations, the coefficient on Height has a positive sign and is statisticallysignificant at the 1 % level in column (1). This suggests that height plays a criticalrole in selecting individuals to be Communist Party members. The absolute value of
its coefficient is 0.003, indicating that a 1 cm increase in height leads to 0.3%
increase in probability that one becomes a member. Coefficients on Father party,
and Mother party also have a positive sign and are statistically significant at the
1 % level in column (1). This means that parental membership increases thelikelihood that individuals become Party members, which is consistent with classbackground being used as a screening criteria. Absolute values of the coefficient on

Father party and Mother party are 0.058 and 0.092, suggesting that the probability
that individuals become a Party member is higher by 5.8% (9.2 %) if their father(mother) is a member. In addition, in line with expectation, Schooling yields asignificantly positive sign, such that higher education leads individuals to become
members. The coefficient on Male is also positive and statistically significant. This
result suggests that the gender difference in the probability of becoming a
Communist Party member is persistently observed in 2008, although Appleton et al.
(2009) reported that the difference diminished from 1988 to 1999.
9 The value is the semi-elasticity (d(lny)/d(x)), which is calculated at the means of the
independent variables after estimation.

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We now turn to the results in column (2) in Table 4. The coefficient on Party has
the expected positive sign and is statistically significant at the 1 % level. Thismeans that Communist Party membership is positively associated with income. The
absolute value of the coefficient is 0.222, which implies that Communist Party
members’ income is 22.2% larger than non-members. On the other hand, thecoefficients on Father party, and Mother party are not statistically significant.
Therefore, parental membership is not associated with income through the market
channel. The combined results of Party, Father party, and Mother party imply thatthe market functions well and that parent’s political power is associated withincome only through the political channel and not through the market channel 10. In
the case of parental membership, such reverse causality does not hold. Consistent
with the prediction, the sign on the coefficient of Height is positive and statisticallysignificant at the 1 % level. Therefore, even after controlling for the effect of height
on income via the political channel, height is positively related to income. The
significant positive sign for Schooling is in line with standard economic theory. The
sign on Male is positive and significant, suggesting that females are discriminatedagainst in the labor market. The results for Schooling and Male are consistent withextant studies (Appleton et al. 2005, 2009; Gao & Smyth, 2015). Combined resultsin columns (1) and (2) of Table 4 strongly support Hypotheses 1 and 2.
Let us switch attention to Tables 5 and 6. Here, we focus on a few key variables;

Party, Height, Father party and Mother party. In column (2) of Table 5, Party,
Height, Father party and Mother party all have a statistically significant positivecoefficient. This is in line with expectations. With respect to column (2) of Table 5, asignificant positive sign is observed for the coefficient on Party and Height. Father

party and Mother party have a negative sign, but are not statistically significant. In
columns (1) and (2) of Table 6, the results are similar to Table 5. The absolute valueof the coefficient of Father Party is larger (smaller) than that of Mother Party in
Table 5 (Table 6). This can be interpreted as implying that if the respondent’s
parent is a Party member of the same gender as the respondent this has a larger
influence on the probability that the respondent will become a member.
In order to more closely examine the effect of parental membership and height
on income, we now turn to Tables 7 and 8. Table 7 suggests the effect of parents
10 Bishop and Liu (2008) find that spouse’s Communist Party membership is positively
associated with income. However, there is the possibility that Communist Party members
can marry high earners because of the Party premium in the marriage market. If this holds,
reverse causality leads to bias in the results of spouse’s membership reported in Bishop andLiu (2008).

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being Party members on income occurs through market and political channels. We
see from Table 7 that parental membership is associated with income only throughthe market channel. One’s income level is higher by 2.34 % (2.22 %) for males(females) whose father (mother) are Party members. On the other hand, income islarger by 1.69 % (0.51 %) for males (females) whose mother (father) are Party
members. This suggests that the membership premium is larger if one has a parent
who was a Party member of the same gender. Turning to Table 8, for males a 1 cmincrease in height leads to a 1.84 % (0.11%) increase in income through the market
channel (political channel). For females, a 1 cm increase in height leads to a 0.82 %(0.08%) increase in income through the market channel (political channel). Thisstrongly supports Hypothesis 3. Further, the effect of an additional 1 cm increase inheight is larger through the market channel than political channel by an order ofmagnitude of 20-fold. This result is consistent with Hypothesis 4.
When Tables 7 and 8 are jointly considered, membership of the same sex parents
on income through the political channel is larger than the effects of a 1 cm heighteffect through the market channel. The father membership effect on male income isequivalent to a 1.22 cm increase in height through the market channel. The mothermembership effect on female income is equivalent to a 2.69 cm increase in height
through the market channel. Therefore, compared with the height effect on income,parent’s membership effect through the political channel is two times larger for
females than males. Therefore, intergenerational political rent plays a more criticalrole in terms of income for females than for males.
6. Conclusion
A number of studies suggest that height is positively associated with earnings.
However, it is likely that the influence of height in the labor market depends on theinstitutional setting. In a post-socialist economy one expects there to be a politicalinfluence on market outcomes For instance, Communist Party membership isthought to influence earnings through the political channel. There is the wage
premium associated with being a member of the Party in China (Bishop & Liu 2008;
Appleton et al., 2009). However, little is known about how height is related to Party
membership, although a height premium has been observed in the Chinese labormarket (Gao & Smyth 2010). Using individual level data for China, this paper has
attempted to decompose the height premium on earnings into a premium throughthe political channel and a premium through the market channel.
We found that height is positively related to being a member of the Communist
13Party, which in turn leads to an increase in income level. This suggests that heightindirectly influences income through the political channel. Even after controllingthe height effect through the political channel, height is positively associated withincome. Therefore, height affects income not only through the political channel, butalso via the market channel. Further, the effect of height through the market
channel is much larger (about 20 times larger) than that through the politicalchannel. After dividing the sample into males and females, the height premiumfrom Party membership is larger for males than females. In addition, comparedwith the height premium on income, parent’s membership premium through thepolitical channel is relatively larger for females than males. The take home message
is that the market mechanism functions well, although in China specific politicalpower influences the labor market. Political influence on income proves to be more
important for females than males. This result could reflect the scarcity of politicaltalent among females compared with males, given there are fewer women in the
Party. This, in turn raises the marginal political product of being female.

14

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17

Figure 1 (a). Association between height and income for males.

Figure 1(b). Association between height and income for females.
Note: mean value in each province is plotted.

18

Figure 2 (a). Association between height and Party membership for males.

Figure 2(b). Association between height and Party membership for females.
Note: mean value in each province is plotted.

19

Table 1. Definition, and descriptive statistics, of variables used in empirical specifications.
Definitions

Mean

Max

Min

14.3

Standard
deviation
26.4

IncomeIncome level (thousand RMB)

1,000

0

Party

1 if respondent is member of the Communist Party, otherwise 0.

0.11

----

1

0

HeightHeight (cm)

164

7.5

190

120

Father Party

0.13

----

1

0

0.02

----

1

0

Age

1 if respondent’s father is member of the Communist Party, otherwise0.
1 if respondent’s mother is member of the Communist Party,
otherwise 0.
Age at time of the survey

43.2

14.0

98

18

Male

1 if respondent is male, otherwise 0.

0.48

----

1

0

Schooling

Schooling years.

0.51

----

1

0

Mother Party

20

Table 2. Mean difference test of income level between members of the Communist Party and others (thousand RMB).
MemberNon-member
Difference in Income
t-values(1)(1)-(2)(2)
Full sample
22.8
13.1
9.8
8.74***(I)

Male sample

24.1

16.2

7.9

4.49***

Female sample

19.7

10.2

9.5

8.90***

Difference in Income(II)-(III)t-values(I) versus (III)

4.3

5.9

1.31

8.17***

(II)

(III)

Note: *** indicates significance at the 1% level.

21

Table 3. Mean difference test of height between members of the Communist Party and others (cm).
MemberNon-member
Difference in heightt-values(1)(1)-(2)(2)
Full sample
168.3
164.0
4.2
13.8***

Male sample

170.9

169.7

1.2

4.21***

Female sample

161.1

159.4

1.7

4.37***

Note: *** indicates significance at the 1% level.

22

Table 4. Results for the full sample.
(1)
Dependent variable:(2)
Dependent variable:

Model:
Probit estimation

Model:
Tobit estimation
0.222***(2.68)

0.003***(3.72)

0.016***(2.89)

0.058***(4.68)-0.005(-0.07)

0.092***(3.58)-0.066(-0.43)0.020***(13.6)

0.082***(8.15)

0.007***(2.89)

0.009(0.60)-0.0006(-0.24)0.0001(0.05)

0.033***(2.62)

0.147*(1.80)-1249-40,494

Party

Party
HeightFather Party
Mother Party
SchoolingAge
Age squaredMale
Log-pseudo likelihood
Left-censoredobservations

118

Endogeneity test for

0.12
p-value=0.72

Party(Wu-Hausman F test)
Observations

Income4033

3581

Notes: Numbers in parentheses are z-values. *, ** and *** indicate significance at the 10% 5% and 1%
levels, respectively. Values not in parentheses are marginal effect for probit estimation and an
estimate of the semi-elasticity ( d(lny)/d(x) ) for Tobit estimation. The following variables are also
included but the results are not reported: residential province dummies, health status dummies,
dummies for location of school respondents where graduated, dummies for number of family members,
occupation dummies, dummies for ownership form of employer, marital status dummies and constant.
Results for endogeneity test are obtained when 2SLS estimation is conducted on the condition thatexogenous instrumental variables are Father Party and Mother Party.

23

Table 5.Results for the male sample.
(1)
Dependent variable:(2)
Dependent variable:

Model:
Probit estimation

Model:
Tobit estimation
0.232**(2.13)

0.005***(3.07)

0.019**(2.46)

0.100***(4.44)

0.007(0.07)

0.073*(1.67)-0.183(-0.83)0.029***(10.7)

0.082***(5.72)

0.012**(2.55)

0.021(0.96)-0.00003(-0.49)-0.0001(-0.71)-810-23,204

Party

Party
HeightFather Party
Mother Party
SchoolingAge
Age squared
Log-pseudolikelihood
Left-censoredobservations

30

Endogeneity test for

0.07
p-value=0.78

Party(Wu-Hausman F test)
Observations

Income2136

1979

Notes: See Table 424

Table 6.Results for the female sample.
(1)
Dependent variable:(2)
Dependent variable:

Model:
Probit estimation

Model:
Topbit estimation
0.193**(2.33)

0.002*(1.83)

0.008*(1.68)

0.026**(2.25)-0.045(-0.71)0.115***(3.85)

0.212(1.61)

0.012***(7.85)

0.072***(8.18)

0.004(1.60)-0.023*(-1.79)-0.00001(-0.03)0.003**(2.55)-401-16,554

Party

Party
HeightFather Party
Mother Party
SchoolingAge
Age squared
Log-pseudolikelihood
Left-censoredobservations

88

Endogeneity test for

1.36
p-value=0.24

Party(Wu-Hausman F test)
Observations

Income1837

1602

Notes: See Table 4.

25

Table 7. Parent’s membership effect through political channel on income.
All

Male

FemaleFather membership

1.29%

2.34%

0.51%

Mother membership

2.04%

1.69%

2.22%

Father membership

No

No

No

Mother membership

No

No

No

Political channel

Market channel

Note: Membership effect is calculated based on results of Tables 4-6 as follows: (A) effectof father’s (mother’s) membership on probability that the respondent is a Communist
Party member. (B) Effect of being a Communist Party member on income. Then, (A)multiplied by (B) indicates effect of father’s (mother’s) membership on income.

26

Table 8. Channel of height’s effect on income.

Effect of additional 1 cm
on incomeMarket channel
Political channel

All

Male

Female1.56 %

1.84%

0.82%

0.07 %

0.11%

0.03%

Note: The political channel is calculated based on the results of Tables 4-6 as follows: (A)effect of 1cm increase in height on the probability that the respondent is a Communist
Party member. (B) Effect of being a Communist Party member on income. Then, (A)multiplied by (B) indicates the effect of height through the political channel.

27