Fiscal Decentralization,Urbanization And Public Education Supply:Theoretical Analysis And Experience In China

In the implementation of the Chinese nation great journey of the "China dream",education plays an important role.Due to the positive externalities of education,its supply should be borne by the government.In fact,since the fiscal decentralization reform in 1994,most of the governance is devolved to local government.While the promotion tournament competition becomes popular,local government's behavior may be distorted,causing the lack of public education supply.After 2000,the urbanization was also incorporated into the local officials'evaluation system as an indicator,which brought in nearly a decade of rapid urbanization.On the one hand,this rapid urbanization brings in huge demand for infrastructure and basic construction,and it might cause out of public education supply with the limited financial resources.On the other hand,the rapid increase of the nominal urban population also dilutes the existing public education resources.In this paper,on the basis of combing and summarizing the existing literature on the supply of public education.The paper respectively discusses the impact of fiscal decentralization and urbanization on the supply of public education.Through analysis of the influence mechanism,I establish a theoretical model by introducing the two factors--fiscal decentralization and urbanization at the same time.In the mathematical model,this paper analyzes how fiscal decentralization and urbanization might affect the supply of public education.Using the panel data of 30 provinces,municipalities and autonomous regions between 2005 and 2013,I run the empirical tests and draw some conclusions:Firstly,on the provincial level,fiscal decentralization slightly increases the percentage of the financial education spending on financial expenditure,and help to improve the quality of basic public education,but it will have a negative impact on per capita supply of public education;Secondly,the current urbanization in China does not bring any scale economies on the supply of public education,while it is the urbanization rate that significantly reduces the percentage of the financial education spending,per capita education spending and the quality of basic education supplies.Besides that,the essay also compares the supply of public education in different regions,the effects of fiscal decentralization and urbanization on the supply of public education have great regional differences.