Bulletin n. 1/2012 | ||
June 2012 | ||
Wang Wen, Zheng Xinye, Zhao Zhirong |
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Fiscal Reform and Public Education Spending: A Quasi-natural Experiment of Fiscal Decentralization in China | ||
in Publius: The Journal of Federalism , vol. 42, n. 2, Spring , 2012 , 334-356 | ||
Since the 1990s, China has pushed forward the province-managing-county (PMC) reform in some provinces as an experiment of fiscal decentralization. The reform provides a good opportunity to examine the impact of fiscal decentralization on fiscal behaviors of local governments in China. Using a data set of 108 counties in Henan Province during 1999–2008, we employ a difference-in-differences approach to investigate how the PMC reform affects local public education spending. The results show that counties given additional fiscal autonomy tend to spend a lower share of their annual expenditures on public education than other counties do. The findings suggest that fiscal decentralization does not necessarily make local governments more responsive to long-term benefits for local residents. | ||