Financial Decentralization Of Chinese Style?Transfer Payment And Income Inequality Between Urban And Rural Residents

Income inequality can lead to many social contradictions.As Lewis,a Nobel economist said,the change in income distribution can cause jealousy and social unrest easily,and therefore has a certain political means.Exploring this series of changes in the process and the reasons fully take a great significance for the government to formulate the strategic policy.According to official researching data,it shows that since 2003,China's Gini coefficient is greater than 0.4 which is always higher than the global average of more than200 countries and regions.In 2008,it was 0.491,0.469 for 2014,up to 0.462 in past 2015.If you refer to the abnormal income factors,the Gini data will be even greater.Exploring the causes of the inequality of income and the corresponding policies is becoming a priority.However,as Daniel.,an economist said: every social problem,even every economic problem,can be attributed to the financial problems in the end.In view of the conclusion of the effect about Chinese decentralization on the income of urban and rural residents is always ambiguous,a series of researches have been done.Firstly,based on the stylized facts of the Chinese decentralization,this paper presents the mechanism of revenue and expenditure decentralization to income inequality from budget and outside two aspects,and later measure urban and rural residents about GINI coefficient and Chinese decentralization on the basis of a comprehensive measure.Empirically,the establishment of the panel data model examines the influence of Chinese decentralization on urban and rural residents' income inequality from national and regional perspective.The results showed as follow: Firstly,whether it is from the national or regional,budgetary revenue decentralization helps to reduce inequality of the income of urban and rural residents.Secondly,the enhancement of the budgetary expenditures will exacerbate income inequality of urban and rural residents from the nation,but still can reduce the urban-rural income inequality significantly in central and western regions with low level of expenditure decentralization.Thirdly,there are consistent effects of revenue and expenditure decentralization from extra-budgetary on the income inequality of urban and rural residents from country and different regions.Revenue decentralization from extra-budgetary makes the income inequality of urban and rural residents even worse while expenditure decentralization makes it better.Overall,as showing in the empirical test of national and sub regional,the connection between inside and outside the budget about fiscal decentralization and urban and rural income inequality is more complex,withdifferences in the impact of the East,central and western regions,while in the same period of the control variables,such as the level of economic development,urbanization and opening to the outside world on the inequality about income of urban and rural residents also has significant regional differences.At the same time,one concern is based on the classical theory of literature of fiscal decentralization,transfer payment as an important part of fiscal decentralization,showing a constant positive correlation with the urban-rural income inequality.In reality,fiscal decentralization did not narrow the urban-rural income inequality in the full sense.As transfer payment is an important means of macroeconomic regulation and control of the central government,whether it achieves the goal of narrowing the income inequality of urban and rural residents is a problem.At the same time,how about the implement of transfer payment in the local government deserves further research in practice.Therefore,based on the background of fiscal decentralization,this paper focuses on the relationship between transfer payment and income inequality from the theoretical and empirical research.First of all from the heterogeneity of fiscal revenue and expenditure in the field of view,analysis of the necessity of transfer payment,further emphasized the role of incentive mechanism in the transfer payment between urban and rural residents income inequality.In the empirical analysis,with the introduction of the asymmetric of fiscal decentralization and three types of transfer coefficient,the results showed that the asymmetric of fiscal decentralization and national and sub regional urban-rural income inequality has a consistent positive relationship.Second,in the analysis of the whole sample,the transfer payments has a significantly positive correlation with the income inequality of urban and rural residents.In the study of sub regions,the the upgrade of transfer payment dependence will increase income inequality in varying degrees in the western and central regions,but in the eastern region has shown a significant positive effect.Third,in the analysis of the transfer payment,tax return shows a significantly negative influence on income inequality in national and sub regional;general transfer payments can reduce the income inequality in the eastern region with the opposite influence in central and Western regions or as as a whole;the special transfer payment reduced the east and central income inequality,but a opposite in the western regions.In the whole sample survey,although the connection between special transfer payments and income inequality is negative,but not significant.Fourth,like the speed of the growth of per capital of GDP development,the rate of population,per capital of foreign investment and per capital affected by years of education has obvious regional characteristics,and the development of regional economy,culture,policy are closely related.Finally,there aresome suggestions about taking care of the strength and direction of fiscal decentralization,dividing property rights and the governance scope rationally.At the same time,the control of the scale and direction of the transfer payment system is necessary.Pay more attention to the construction of the system of transfer payment and the formulate of the regional development strategy,relevant recommendations are referred.To perfect the transfer payment system,the standardization of the tax return,the construction and expanding of the general transfer payment,the clearing about the special transfer payment standards with moderate scale are as following.