Research On Fiscal Expenditure Impacts On Intergenerational Equity In China

Nowadays the gap between household resources and capital has resulted in anunequal situation where younger generation is entering the market. Additionally, dueto a deficiency in the fair competition mechanism of labor market, this generation canhardly contribute to the social mobility through their own efforts. Therefore, topromote social mobility and to achieve social equity between generations are not onlykey issues in socio-economic development but also important responsibilities of ourgovernment.The aim of this article is to address the following questions: what is the situationof intergenerational equity? In what way are household resources and capitaltransferred to younger generation? What is the role of family background in youngergeneration’s acquisition of resources and social status? To what extent would macrofactors such as government fiscal expenditure and policymaking influence socialintergenerational mobility?Based on the household and adulthood data offered by CHNS database, firstly,this article has picked up six variables (education, income and employment of twogenerations respectively), evaluating two latent variables (family background andsocial status of younger generation), builta structural equation model and drawn apath diagram of household resources and capital transfer. The results have shown arelatively lower intergenerational equity, especially in inland areas like Hunan,Guangxi and Guizhou, intergenerational equity of which is far lower than that ofcoastal areas like Jiangsu and Shandong. This has demonstrated regional differencesin our contemporary society. Secondly, the article has analyzed the effects of fiscalexpenditure on social equity. It has revealed that expenditures of education, publichealth and employment have outstandingly promoted intergenerational equity andfiscal expenditure has shown its effectiveness in increasing social mobility to somedegree. Thirdly, the objective of this article is to promote our social equity and toprovide suggestions of promoting social mobility, which includes establish ing a labormarket of fair competition and to strengthening government’s reformation ofexpenditure scale and structure.