Research On The Relationship Between Regional Government Education Spending And Regional Resident Income Difference

Since1978, China’s economy has grown rapidly. Now, the scale of China’s GDP has overtaken that of Japan and China is the second biggest country from the perspective of GDP. With the rapid economic growth, Chinese income inequality is also increasing. Numerous researchers have found that China’s gini coefficient had exceeded the internationally recognized security line0.4since the beginning of the21st century and the state of China’s income distribution is worrying. An unfair income distribution would not only threaten social stability but affect domestic consumption, so the governments need taking measures to manage income inequality, the governments usually adopt several fiscal policies, such as tax, social security, Intergovernmental transfer payment and education spending to regulate income difference. Government education spending can improve the earning ability of low-income population and promote the starting point fairness, so it’s a good measure to perfect the state of Chinese income inequality.The emphasis of the thesis is the relationship between the difference of China’s regional government education spending and that of regional residents’ income. Through theoretical and empirical analysis, I find that the difference of China’s regional government education spending is an important reason for regional residents’ income inequality and narrowing the gap of regional government education spending can perfect the state of regional income distribution. However, according to empirical conclusions, the effect of government education spending is limited. If we want to alter regional income distribution, other income regulating means must also be paid more attention.The thesis is organized as follows:Chapterl, Introduction. This section introduces the background, research methods, research line and content, innovation and defects of the thesis.Chapter2, Literature review. This section introduces the theoretical research and empirical research on the relationship of education factors and income distribution in foreign countries and China.Chapter3, Theoretical analysis of government education spending and resident income difference. This section first introduces the research on the relationship between educational investment and income difference in the theory of human capital. Then this section analyzes mechanism of the influences of government education spending on income difference. At last, this section introduces three other income regulating means, such as tax, social security, Intergovernmental transfer payment.Chapter4, Current situations of government education spending and resident income difference among different areas in China. This section describes the measure indexes of regional differences at first, then measures the differences of government education spending and income difference among different areas in China with the indexes mentioned above.Chapter5, Empirical analysis of government education spending and resident income difference. This section introduces the research methods of the empirical analysis, such as VAR model, granger causality test, impulse response function and variance decomposition at first. Then this section makes an empirical analysis using relevant dates and draws the conclusion.Chapter6, Policy recommendation. Based on the theoretical and empirical analysis, this section makes some policy recommendations to narrow the gap of government education spending.