초록 열기/닫기 버튼
This paper examines local fiscal behavior in contemporary China in the backdrop of decentralized spending responsibilities and re-centralized revenues. Vertical imbalance after the 1994 tax sharing system reform, coupled with other features of the fiscal institutions, is not conducive to conservative local fiscal behavior. Moreover, a main driving force behind the expansion of local governments is the politically motivated intergovernmental transfer scheme. The center in effect "buys" political stability in sensitive areas while holding local leaders accountable for their tax efforts. A dynamic panel analysis on Chinese counties reveals that a million-yuan increase in general transfer payment and salary raise subsidies respectively would add 15 and 16 employees to the county government payroll, other things being equal. At the same time, growing amount of subsidies from upper-level governments does not crowd out or significantly affect local tax effort. Additional dynamic panel data analysis at the provincial level produced similar findings.
