The Impact Of Discretionary Budget On Wage And Benefit Expenditure In The Bureaucracy

Wage and benefit expenditure is the fiscal expenditure item most closely and directly related with bureaucrats' utility.Does bureaucracy tend to spend discretionary budget on expanding wage and welfare expenditure? Meanwhile,the wage and benefit expenditure of bureaucracy is determined by it's size and the level of wage and benefit.If discretionary budget is used to expand the wage and benefit expenditure of bureaucracy,whether it is used to expand the size or improve the level of wage and welfare has yet to be investigated by empirical research.Based on the panel data of the 628 constituent departments of provincial governments in China over the period 2015 to 2017,the ordinary regression method and instrumental variable estimation method are both used to investigates the impact of discretionary budget on the wage and welfare expenditure,the size and the level of the wage and benefit of bureaucracy,to enhance the reliability of the causal relationship estimated.In addition,the samples of municipalities directly under the central government were further removed,and the remaining data were used to carry out robustness test on the empirical results,so as to investigate the sensitivity of empirical results to data absence and sample selection.The empirical analysis suggests that discretionary budget has a positive impact on wage and welfare expenditure.Although there are differences in the degree of the impact between provinces and departments,these differences do not pose a subversive threat to the empirical results.The action path of the impact includes expanding the size of government departments,but it also does not rule out improving the level of wages and benefits.The government departments in western China with relatively tight fiscal funds and low level of wages and benefits are more inclined to use the discretionary budget to improve the level of wages and benefits.Moreover,there is a “inverted U” type relationship between the term of office of the chief executive of the department and the wage and benefit expenditure,and the fourth year is the extreme point when the relationship turns from positive to negative.Wage and benefit expenditure occupies the important proportion in the expenditure of bureaucracy,studying the effect of discretionary budget on wage and benefit expenditure,which is of great enlightening significance to promote the allocative efficiency and utility efficiency of financial funds,can serve the international budget reform and the domestic full implementation of the budget performance management,and can prove that the financial fund allocation is affected by the self-interest motive of bureaucrats and bureaucracy,providing unique insights for fiscal allocation theory.The originality includes: Firstly,as far as research question is concerned,the focus of research about public finance fund allocation and management is transferred from external use to internal consumption.Secondly,from the theoretical perspective,the paper uses the bureaucratic self-interest discourse of the public choice school to theoretically package the relationship between discretionary budget and wage and benefit expenditure.Thirdly,as far as research design is concerned,the results of causal relationship estimation are more pure and reliable with the aid of instrumental variable method.