Changes And Determinants Of Scale Of Local Government Employment

Government employment is an important index to measure the size of government,and also provides a carrier for the government to exert its functions. Governmentsaround the world have tried to take reform measures to curb the irrational augment offiscal-dependent population in different stages of economic development. In China,several reforms of streamlining government organs also didn’t seem to curbfiscal-dependent population expansion effectively. In recent years, fiscal-dependentpopulation is still in growing trend, so research on that is a hot issue.In this article, we try to look for the endogenous drives which can lead tooptimization of financial support population size and structure from a new perspectiveto explain changes in the population instead of following the traditional view andpaying attention just to measure what is the optimal size of government like. Based onthe relevant theories and historical data, we can perceive the law of governmentemployment change in long-term from the view of role that government plays. And thencentering on the interaction between the size of government and economic growth, weexplore the determinants of government employment. Beyond the linear framework ofWagner Laws, we can make a preliminary inference from the empirical data： Althoughthe size of local government is still increasing in long-term, with the constantdevelopment of economic in China, the size curve will have a "turning point", namelythe size of government and economic growth indeed exist "inverted U" relationship, andthis endogenous relationship is the main engine of optimizing the government scale andstructure. To verify that, we choose the panel data of county government in SiChuanProvince from1997to2009to establish a model of regression research. Besides, wealso conduct research on the determinants of the size of financial support populationsuch as fiscal expenditure, population, acreage, institutional reform, regions and so on.