Wang, Z., & Chen, D. (2025). The Price of Sacrifice: Disparities of Revolutionary Capital and Fiscal Bargaining in China

Why do some localities receive systematically larger discretionary fiscal transfers from the central state, decades after the revolution that created it? We argue that counties with greater revolutionary sacrifice receive retrospective fiscal dividends: the Chinese state rewards historical contributions to its founding through contemporary resource allocation. Using large language models to classify a novel dataset of over 2 million revolutionary martyrs across 2,800 county-level units, we examine how historical sacrifice shapes fiscal distribution and identify two complementary mechanisms. First, period legitimacy: only martyrs who died before 1949, during the CCP’s foundational struggle for state power, generate positive fiscal returns. Deaths after 1949 produce no significant effect, confirming that the state rewards sacrifice tied to its founding narrative, not suffering under its own rule. Second, elite network conversion: counties with at least one martyr of vice-department rank or above show a precise and significant fiscal premium, as surviving revolutionary elites converted wartime networks into durable bureaucratic bargaining leverage. OLS estimates show that a one-log-unit increase in per capita martyr density is associated with a 9.4 percent increase in per capita discretionary transfers (p < 0.01). Instrumental variable estimates using terrain ruggedness and historical precipitation shocks confirm the causal direction. Together, these findings document enduring hierarchies of sacrifice in how revolutionary states allocate resources retrospectively, contributing to debates on the long-run consequences of revolutionary state-building.