Research On Effects Of Fiscal Systems Evolution On Social Security Spending In China

After the founding of PRC, China’s fiscal system experiences a complex evolutionprocess. With the development of the fiscal system, national fiscal has become more and morepublic, and it has four important influences on social security spending. Firstly, this papersummarizes the documents which are about the changes in the China’s fiscal system, theinstitutional innovation of China’s fiscal system, the relationship between the changes in theChina’s fiscal system and economic development, the relationship between incomedistribution and China’s fiscal system and the social security spending. Secondly, this paperexpounds China’s financial system evolution process. China’s fiscal system experiences fourstage changes, which are unified revenue and expenditure system, fiscal responsibility system,tax sharing system and public finance system, then summarizes their characteristics. Thirdly,this paper briefly describes the fiscal system’s effects to the social security. These effects arestatus changes, the growth of scale, structural changes and functional maintenance. And thispaper elaborates the influence of fiscal system’s changes to the status of social security, thegrown of social security, the structure of social security and the function of social security.Fourthly, this paper has given some research about fiscal systems evolution to social securityspending in China with theoretical analysis. The research builds two VAR models, with thedata of the financial regulations, social security spending and GDP, using in the stationary test,co-integration test, granger causality test.From the research, we choose a better VAR modelto analysis impulse response, build a VEC model with dummy variables. After all, the resultthat is there is a long-term equilibrium relationship between the China’s fiscal system andsocial security spending, and China’s fiscal system is the Granger cause to social securityspending and so on. Finally, this paper combines the theory with regression model, thengiving four suggestions to our government.(1) Our government should accelerate the socialsecurity function transformation and further increase investment in social security.(2) Ourgovernment should optimize the structure of fiscal expenditure on public services.(3) Ourgovernment should regulate the financial transfer payment system.(4) Our governmentshould narrow the social security expenditure gap between city and country.