Empirical Study On The Influence Of Fiscal Expenditure Competition On Social Welfare Level

The local government is an important part of the government system, its operationwill directly affects the economic and social development and people’s living level. Withthe process of economic globalization, the mobility of production factors are increasing, inorder to contend more liquidity elements, local governments produce competition, andfiscal competition is the most important form. Compared with the tax competition, fiscalexpenditure competition can avoid produce crowding-out effect to private sector economy,and better reflect the function of a service-oriented government, has become the main formin the competition between government.The intergovernmental fiscal expenditure competition can make the local governmentimprove the supply level of public service, thus, the production factors(capital, labor,technology) will flow into the region, and improve the efficiency of resource allocation, isgood for economy growth and social welfare level. One the other hand, in order to promoteeconomic growth in the region, the local government will enhance constructiveexpenditure, and relatively decrease social service spending about the livelihood of people,thus, the intergovernmental fiscal expenditure competition is bad for social welfare level.This paper is based on the basic theories of fiscal expenditure of local government,explain the concept of the fiscal expenditure competition, causes of fiscal expenditurecompetition, forms in the different frame system, the development of fiscal expenditurecompetition in our country since the reform and opening, discussed the institutionalenvironment of intergovernmental fiscal expenditure competition and its influence on thelocal government financial behavior, on this basis, analyze the possibility that the fiscalexpenditure competition affect social welfare.In the foundation of standard analysis, this paper uses the measurement tool toanalyze the influence of the intergovernmental fiscal expenditure competition to socialwelfare level between2003and2012. In order to make the empirical analysis morepersuasive, this paper defines social welfare level and its influence factors, analyze theincome distribution, social factors, public service level of, the level of economicdevelopment, government scale and the pattern of economic development on social welfarelevel, and the human development index(HDI) take place of social welfare level, and makethe quantitative evaluation to social welfare level in thirty-one provinces of China between2003and2012.The result shows that with the growing of economic development, socialwelfare level improves in this period of time. One this basis, through establishing the panel regression model between the fiscal expenditure competition degree and social welfarelevel, verify the fiscal expenditure competition’s influence on social welfare level in therecent ten years, and find that the fiscal expenditure competition is bad for social welfarelevel between2003and2012. In view of the above conclusions of empirical analysis, thispaper puts forward the policy suggestions to regulate the fiscal expenditure competition,guide the fiscal expenditure competition of local government moderately to improve socialwelfare level, including defining the functions of the government;strictly defined thosepublic services which are provided by local government; regulate the expenditure structureof local government; strengthen the cooperation and communication between localgovernments and create a win-win pattern; perfect the evaluation system of local officials;seek to the diversified pattern of fiscal expenditure competition; promote the populationmobility.