The Impact Of Fiscal Decentralization On The Level Of Local Higher Education Investment

Education is the foundation of a century-long plan.After China's economy entered the new normal,the economic structure has been optimized and upgraded,and the economic growth has turned to be driven by innovation,which is more dependent on the accumulation of high-quality and highly educated talents provided by higher education.Since the development of China's higher education,it has gradually shifted from expansion to connotation development.The connotation construction,quality improvement and inter-regional coordinated development of higher education require a large amount of funds.In China,local colleges and universities are mainly engaged by the organizers,and the finance provides guarantee and support for the development of local public universities,as well as financial subsidies for local private universities.As an important financial system arrangement,the central and the local fiscal decentralization has a significant impact on public services and livelihood security,including local higher education.This thesis takes fiscal decentralization as a breakthrough point to study its impact on the investment level of higher education.Based on the theory of fiscal decentralization,the thesis concludes that the investment level of local higher education funds is generally affected by two factors: financial system and government behavior.And given China's typical political centralization and fiscal decentralization of Chinese-style fiscal decentralization,it has different effects on the supply of public goods.Specifically,when the local government provides funds for higher education,it will be affected by the negative incentive mechanism such as political promotion incentive under GDP-based relative performance appraisal,and the spillover of educational income.At the same time,the demand for talents and innovation under the economic transformation,as well as the increasingly important livelihood projects in the political performance appraisal have exerted a positive influence.This thesis constructs a multi-dimensional fiscal decentralization indicator combination,integrates government competition,education income spillovers,higher education funding competition and other factors,uses the 1997-2016 provincial panel data to establish a two-way fixed effect model for empirical research,and further analyses the impact of fiscal decentralization on higher education investment level by time and sub-regions,finally draws conclusions and policy recommendations.The results reveal that:1,fiscal decentralization has significantly reduced the local higher education funds,which indicates that fiscal decentralization still has a dominant negative impact on the investment of local higher education funds at the current stage.Higher education is a kind of quasi-public service with long-term economic growth effect,and local government officials are more inclined to invest in public goods with short-term economic growth effects under the promotion incentive mode with short-term economic growth as the main performance evaluation indicator;furthermore,Higher education has positive externalities,the free flow of talents will aggravate the “free-riding” behavior in the net inflow of talents,and reduce the investment willingness of the government in the net outflow of talents,which enhance the negative impact of fiscal decentralization on local higher education.2,affected by the downward pressure of the economy and the investment competition in compulsory education and others,the negative impact of fiscal decentralization on the investment of local higher education gradually increases with the passage of time.3,fiscal decentralization has significant regional differences on the local higher education investment.In view of the local economic development level and the loss of human capital,the negative impact of fiscal decentralization on the eastern region is the smallest,followed by the central region and the western region.The thesis puts forward some recommendations: 1,China should give full play to the macro-control role of the central finance,adopt the way of transfer payment,and further improve the cost compensation mechanism of higher education.2,China should adopt higher education development into government performance evaluation and gradually establish a "bottom-up" performance evaluation system to promote the transformation of local government behavior patterns.3.China should learn from the experience of developed countries in the West,especially Europe,promote the higher education investor to move upward,and improve the multi-channel fundraising system.