Research On The Supply Behavior Of Compulsory Education Of Local Government On The Frame Of Chinese Fiscal Decentralization

The rapid growth of China's economic and infrastructure can be seen as a miracle in the whole world. Under the framework of Chinese-style fiscal decentralization, this miracle can continue to be traced on. However, behind the miracle, the typical facts show that local government expenditure structure is uncoordinated: they do every efforts to strengthen infrastructure construction so that this behavior will weak the supply of compulsory education. The actual situation in China cannot be fully explained with the western classical theory of public goods supply. Chinese-style fiscal decentralization combined with the actual situation to explain the behavior mechanism of local government in education supply, this is the significance of this paper. The panorama of this paper is the Chinese-style fiscal decentralization. The research object is Chinese compulsory education. This paper is to examine the incentives mechanism of Chinese-style decentralization and local government behavior. The aim is to explain the deep-seated reasons for the insufficient supply of Chinese compulsory education.The core meaning of Chinese-style fiscal decentralization as follow: the decentralization of economic system combined with the vertical political management system. The re-classified sharing taxes between central and local government incentives the local government budget and extra-financial. The GDP based top-down centralized assessment system makes local governments in the promotion tournament more competitive. It is know that compulsory education is significant for the long-term economic growth and welfare of all residents. The characteristic of compulsory education is public goods which spillover from the weak production. The benefits from the investment of compulsory education for local governments and officials term economic performance has little benefit, leading to local government action of pursuit of capital investment and economic growth. Drastic financial competition and promotion tournament from all regions reduce the financial expend on compulsory education.This paper uses the panel empirical data which of 31 provinces between 1999 and 2007 confirmed the above theory. Fiscal decentralization and the improvement of competition for local governments, assuredly reduce the local government funding for compulsory education. Fiscal decentralization and political centralization reshape the behavior of local governments, the competition of local governments for economic growth have neglected the supply of compulsory education. This paper draws this conclusion do not intend to deny the important role of decentralization reforms. The impressive achievements of economic growth and infrastructure, the difficulties of compulsory education, can be regarded as both sides of a coin. To improve the situation of insufficient supply of compulsory education, the government should rationally divide the responsibilities of central and local education on spending, reform the indicators of performance evaluation, strengthen democratic institutions and abolish the household registration system gradually.