The Research Of Fiscal Education Expenditure’s Effect On Income Gap

Since China’s opening up, it has experienced rapid development, the whole economy and people’s income have developed obviously. In this process, the problems of income distribution also appeared increasingly. At present, China’s Gini coefficient is very close to 0.5, the current situation of residents’ income gap needs to adjust and perfect eagerly.The external effect of education is very strong and obvious, with its high social benefits and economic benefits, education can be associated with people’s income level through this special path of cultivating human capital, which can affect the problems of income gap. The social and economic functions of education must be achieved through education expenditure, fiscal education expenditure is the government’s public spending on education, its unique policy background and the stability making it become the main source of education funds.Firstly, this article studies the role of fiscal education expenditure from the perspective of theory, using transmission mechanism of education participating in the personal incomes distribution to analyze the specific influence of fiscal education expenditure on income gap.Secondly, the article analyzes the present situation of income gap and fiscal education expenditure in China, including the income gap existed between urban and rural areas, different regions and different industries. Thirdly, the article uses related data, making empirical analysis to analyze the influence of different fiscal education expenditure on the residents’ income gap:one empirical analysis is about fiscal education expenditure and the income gap between urban and rural areas, it uses the panel data, fixed effects model and stepwise regression to investigate the effect of fiscal education expenditure gap on income gap between the urban and rural areas,and the results show that the present fiscal education expenditure has an inverse relationship with income gap between urban and rural areas, the level of education equalization in urban and rural areas has an significant effect to narrow income gap. The other empirical analysis is about fiscal education expenditure and regional income gap, it uses Tal index, the VAR model and impulse response, and the results show that the gap of fiscal education expenditure is the granger cause for residents’ income gap in east and west region of China, and those effects last long; as for the central region, the above relationship is not significant. Finally, the article summarizes the empirical conclusions, and puts forward policies such as transforming idea, intensifying investment and adjusting the structure of fiscal education expenditure, improving the efficiency of using fiscal education expenditure and other relevant tools.