Research On Fiscal Decentralization And Local Public Service Provision In China

The system of tax distribution reformation is the main way of the central government to strengthen the control of fiscal revenue.In terms of actual financial expenditure,the local government is more effective and useful and the local government is responsible for local public services.With the current fiscal decentralization system in China,the problem of public service supply of local government has gradually become the focus in society and academic circles.At present,the existing literature is mainly based on the provincial level while the actual situation is that local public service supply is often provided by the municipal government.Obviously,the existing conclusions are not convincing.In this context,this study explores the impact of fiscal decentralization on local public service supply from the municipal level.This study makes a summary of representative domestic and overseas researches on the relationship between fiscal decentralization system and public service supply.Based on that,this makes a theoretical analysis of the relationship between fiscal decentralization system and public service supply.From the analysis,in Chinese current context,the financial competition and political promotion competition contribute to higher attention of the local government on economic development,which results in the shortage of local public service supply.Considering the availability and representativeness of data,two aspects,health care and education,are selected to describe the situation of Chinese public service supply.According to the horizontal and vertical comparison and data from 2005 to 2014,it is found that from,Chinese governments of all levels pay more attention on education and health care services.However,compared with other countries in the same income level,the investment in these two public services is still inadequate.From the perspective of regional comparison,the gap of supply of education in general secondary schools is gradually increasing among the cities while the gap of supply of medical and health services is gradually decreasing.Finally,relevant data of 282 municipal cities from 2005 to 2014 is sample data in this study.The primary education expenditure and medical and health expenditure are taken as the representatives of public services to explore the relationship between the degree of financial decentralization and public service supply.The degree of financial decentralization is measured by: Per capita municipal financial expenditure within the budget/(Per capita municipal financial expenditure within the budget+ Per capita provincial financial expenditure within the budget + Per capita central financial expenditure within the budget).Primary education is measured by staff-student ratio in primary schools and medical and health services are measured by hospitals and the number of beds in hospitals every ten thousands of people.The panel regression model is established in this study.The study shows that with control variables including the degree of economic development and the government financial status,Chinese fiscal decentralization has a significantly negative correlation with primary education supply and a positive correlation with the degree of health care.There are significant differences of the impact of financial decentralization on public services in different regions.