In the first column of Table 3, we report a regression with the annual GDP growth and provincial and year indicators as independent variables. Consistent with our hypothesis, the annual GDP growth rate has a positive impact on the probability of promotion and a negative impact on the probability of termination. The sign of the coefficient of annual growth rate is positive and is significant at the 5% level. Moreover, the marginal effects of economic growth on turnover are reasonably large. The marginal effects of the annual growth rate when evaluated at the mean of the independent variables are 0.188 for promotion and −0.251 for termination. These numbers mean that when the annual growth rate increases by one standard deviation (0.06) from the mean (0.10), the probability of promotion will increase by 0.011 or 15% of the average probability of promotion (0.075), and the probability of termination will decrease by 0.015, which is also 15% of the average probability of termination (0.103).
We next report a regression that includes age, age65, tenure, education, central connection and the lagged provincial per capita GDP as control variables (Table 3, column 2). With these variables controlled, the annual GDP growth has about the same marginal effects on the probabilities of promotion and termination. The effects of both age and age65 are negative and significant at the 1% level. The marginal effect of age for promotion is slightly smaller in absolute value than that for termination (−0.003 vs. 0.004). An increase of age by 1 year from the mean of 60 will decrease the probability of promotion by 0.3 percentage points and will increase the probability of termination by 0.4 percentage points. The effect of age65 on promotion is very large. Reaching the age of 65 will reduce the probability of promotion by 0.055, or 73% of the average probability of promotion, and will increase the probability of termination by 0.09, or 87% of the average probability of termination.
The regression also shows that previous or current work experience in the central government increases (decreases) the probability of promotion (termination). The central connection indicator has a positive coefficient, and it is significant at the 1% level. Moreover, the magnitude of this effect is large. Having central connections increases the probability of promotion by 3.4 percentage points and decreases the probability of termination by 3.5 percentage points. This result seems to be consistent with the argument that experience at the center helps cultivate informal connections with central leaders who can influence the personnel evaluation process. Another significant variable in column 2 is the tenure variable, the negative sign of which means that promotion (termination) is less likely for leaders with longer (shorter) tenure. One plausible interpretation for this result is that longer tenure without promotion may be a bad signal indicating lack of ability