Financial inequalities and inequities in the financing of compulsory education in China

This study used county-level survey data for 1997 and 2000 to examine financial inequalities and inequities in the financing of compulsory education in China. The statistical analyses on financial inequality found substantial variations in per student spending and revenue within regions and areas as well as across regions and areas as of 2000. Various statistical measures reported substantial financial inequality residing both within provinces and within counties. Analyses of financial equity found that the financing of compulsory education in China had severe problems of student inequity. On the one hand, students in similar situation didn't receive and spend the same amount of resources (horizontal inequity). On the other hand, disadvantaged student groups, instead of being provided with additional resources, had lower revenue and spending levels (vertical inequity). Regression analyses found that Chinese compulsory education was neither "wealth neutral" nor "fiscally neutral". Taxpayer inequity was another problem as of 2000. After-tax burden of compulsory education was more than twice as high in rural areas than in urban areas. Analyses on the changes from 1997 to 2000 found that the overall level of inequality had increased. But the changes in student inequities are hard to ascertain. In this three-year period, there is a trend of increasing reliance on user charges and less reliance on levies and contributions from local communities. This lowered the after-tax burden level but may have added to the financial difficulties of poor households with children in schools. The analyses on the intergovernmental grants for compulsory education found that the grants were distributed in favor of the disadvantaged student groups. But the size of the grants was too small to reverse the trend of increasing financial inequality. The ongoing fiscal-transfer projects, on the other hand, have increased the size of the grants; and are increasingly targeting disadvantaged students rather than focusing on achieving the quantitative goals of the national campaign of universal nine-year compulsory education.