An Analysis Of The History Of County Administrative System Reform And The Income Effect Of Current Province-governing-county Reform On Rural Residents

This paper examines the relationship between the Province-governing-county(PGC)reform and rural residents' income and living(education and health care).It is an significant topic while receiving little attention.Numerous literature discusses the relationship between the PGC reform and regional development.However,the growth of rural residents' income is not consistent with that of economy.Although the living of rural residents has been improved,they do not share the same welfare with that of citizens.To promote the economic growth,local government would like to offer a lot of assistance to firms and enterprises even at the cost of rural residents'welfare.Therefore,could the PGC reform balance between the economic growth with rural residents' income?Does the PGC reform affect rural residents' income and their living?It plays an important role in achieving social equality and stability to identify the influence of PGC reform on rural resident's income and living.According to China's history,the balance between efficiency and stability was always the guideline for the central government to conduct administrative system reforms.However,the PGC reform today concentrates on efficiency while paying less attention to equity.Rural residents are the main body of our population,whose welfare is fundamental for the nation's stability.Therefore,improving rural residents'living should become an important objective of PGC reform.By previous literature,the influence of PGC reform on economic development is undetermined.Besides,the PGC reform would even enlarge the income disparity between the urban and rural areas.It is important for us to examine the impact of PGC reform from both the perspective of efficiency and that of equity.This paper tests the effect of PGC reform on rural residents' income,education and health care.Empirical results show that the reform might not increase the growth of rural residents' income but impede it instead.This paper distinguishes between the fiscal system reform and the County-power-expansion(CPE)reform,which are two forms of the PGC reform,and finds that although the fiscal system reform does not affect rural residents'income,the CPE reform significantly impedes the growth of their income.In addition,this paper argues that the PGC reform could impact public expenditure,industrialization,and the urban rate,through which it affects rural residents'human capital and job opportunity and governments' investment in the agriculture.Thus,this paper also studies the influence of the PGC reform on the public expenditure,industrialization,and urbanization.This paper finds that the CPE reform significantly decreases governments'expenditure in education and health care while promotes tax competition.However,the CPE reform dose not have any significant effect on the urban rate.On the other hand,the fiscal system reform only influences the amount and size of local enterprises.Furthermore,this paper points out that the county government under the CPE reform has stronger willing to compete with other counties.Combined with the incentive of political promotion,the CPE reform strengthens local governments'propensity to promote economic growth,which however negatively affects rural residents' human capital and income.Furthermore,this paper also conducts several robustness checks,which give the same result:the CPE reform impedes the growth of rural residents' income.Thus,this paper suggests that while promoting the PGC reform,province government should enhance the supervision while the county government takes both economic growth and residents' welfare into consideration,increasing the expenditure in education and health care,and raising rural residents' income.