Research On The Impact Of Public Expenditure Structure On Regional Wage Levels

The report of the Nineteenth National Congress of the Communist Party of China pointed out that China’s current stage of development is facing a prominent problem of“insufficient and unbalanced development".Based on the development of wage level in recent years in China,the trend of average wage level of urban workers in China is observed from 1991 to 2016,and it turns out that,in recent years,the regional wage gap in China has presented a generally expanding trend.The wage gap between regions is harmful to the sustainable development of China’s economy.It’s the problem and challenge that we all face.Started with the perspective of structure of the public expenditure,we studied how it influences the wage level.We try to find the way to balance the present wage gap.Previous studies had seen that the public expenditure play a significant role in the regional economic growth,the increase of the human capital and the wage of residents.Among the public expenditure,infrastructure spending and human capital investment as the representative of the productive expenditure significantly influence the regional economic growth and increase the wage level.It can also attract labor by improving the social production and living environment,which indirectly improve the regional wage level.Especially,the human capital plays an important role in mediation and regulation in the process which public expenditure affects the regional wage level.Based on the above,we study the impact of public expenditure on regional wage level from the perspectives of scale and structure and the impact mechanism.In the first part,public expenditure is divided into productive public expenditure and non-productive public expenditure according to its economic trait,and livelihood expenditure,maintenance expenditure and constructive expenditure according to its function and we select representative indicators of local public goods and services to study the impact of public goods and services provided by the government on regional wage level from the perspective of existing stock.In order to enhance the robustness of the research results,we use the concerning data with a lag of one year to do the robust tests.In the second part,a mechanism hypothesis is established to test the mediating effect and regulating effect of human capital factors in the process which public expenditure affects regional wage level.In order to make the model estimation more accurate,several estimation methods are used according to the data characteristics,including fixed effect model,differential generalized moment estimation method(SYS-GMM)and system generalized moment estimation method(SYS-GMM).The empirical results show that the public expenditure has a significant positive impact on the regional wage level.In terms of structure of public expenditure,the influence coefficient of productive expenditure,livelihood and constructive expenditure is higher than that of other types of expenditure.Increasing the supply of public goods and services is also conducive to improving the regional wage level.The mediating effect in the mechanism is obvious.The public expenditure strongly effects the level of human capital positively,which fiirthermore will improve the level of wage.Besides,there is also the regulating effect of human capital.The effects vary from the types of the public expenditure.The result also shows that the increase of public expenditure can improve the wage level of the tertiary industry more effectively with the influence of the factor of human capital.With the help of the results,relevant policy arrangements can be proposed.In order to balance the wage gap,it is important to update the structure of public expenditure,to increase the constructive expenditure and expenditures relevant with investment of human capital,which will improve the wage level in poor area and achieve the balance goal.