Political career incentives and multitasking trade-off: Evidence from setting performance targets in Chinese cities

Abstract

Though the goal-setting theory has attracted much attention, current research neglects how the principal-agent structure shapes agents' target-setting. This study estimates how principal-agent incentive arrangements affect target-setting from the micro-level perspective of local officials. Using a novel fuzzy regression discontinuity design, it shows that China's political selection system creates a significant downward discontinuity in city-level agents' political career advancement prospects at the 55-year-old age threshold, and city agents with weaker age-based career incentives set lower GDP growth targets than those with stronger ones. Moreover, this effect decreases when these agents are under increased pressure to curb environmental pollution. The subperiod analysis suggests that the strategic target-setting behavior of local agents evolves dynamically in response to changes in performance evaluation criteria. It contributes to the target-setting theory in principal-agent contexts, featuring a rigorous political promotion ladder and trade-offs associated with multiple tasks.