The Assessment Of Inequality In Public Services Provision And Optimization Of Inter-government Transfer Design

This paper is set up to study how to strengthen the level of public services provision with more equalization. It mainly evaluated the degree of provision unfairness among provinces empirically, and figured out the way of optimizing the transfer payment system to achieve the goal of provision equalization, all of which follow the mainline of "what-why-how".This paper is made up of five important parts and eight chapters in all. These five empirical tests explain the problems about "what, why and how" one after another. Specifically speaking:The first empirical chapter sets up two general static theory models and analyzes the way that the welfare expenditures making outputs and welfare increase, also verified the channel using city data. It finds that if tax burden is controlled at a reasonable level, the supply of public services could promote the economic growth lastingly, only if the public services could increase the employment, induce the technology innovation and optimize the industry structure. On the other side, public services can also create acceptable social effects. As the government increase the input of public services, then it can improve the environment quality as well as prompting the growth from a long and dynamic aspect, which mainly caused by the effects of technology improvement, consumer preference and regulation. The government should make best use of public services to create employment, optimize the industry structure and urge technology innovation. Without any more tax burden, the public services are advantage of labor capital accumulation and employment ability training, as well as industry optimization and technology innovation. This chapter gives the basic theory for the next chapters.The second empirical chapter evaluated the degree of supply unfairness among provinces empirically, with the'cost adjustment'and the technology of SEM. It found huge differences in public inputs, productivity and benefit sharing among regions and provinces. More important thing is, after taking the CPI and production cost into account, the real input of some public services have been declining, which is harmful to improve the provision level. The government should set up a systematic mechanism to ensure enough input for the basic public services. The government should quit some construction projects and encourage the public expenditures inclined to invest in the public services just as education, medical treatment, environmental protection, social insurance, housing and so on. The government should also innovate the wage adjusting mechanism which could help attracting qualified staff and make them flawing without block. On the other side, the governments should make a whole plan to allocate public resources reasonably, and assure that the inferior class and people living in the countries to get the equal opportunity to share the same public services, both from the management system and policy decision.The third empirical chapter constructed a quasi-experiment about decentralization and studied how the Chinese-style decentralization leads to the unfairness in the public services provision. It founds that the Chinese economic decentralization is embed with the institution of official promotion, which made the economic competition intensifying both in vertical inter-governments and horizon inter-governments. Even if the primary governments are given more economic decision and administrative management power, they would also make the add funds in use of construction instead of providing basic public services. And the tendency of'more investment in construction'is more obvious in the poorer areas as a result of marginal repay decreasing. We should allow the primary governments to have more decision and management power. Make a change of the situation that the responsibilities are not matched with rights, which is now popular in primary governments. Encourage them to promote the economic growth in their own pace and store enough funds for the supply of public services. Also, we should change the political promotion evaluation which only pays attention to GDP growth. This requires the central government itself changes this institution arrangement and takes more note of the accomplishment schedule and quality of public services, which could really meet the public needs.The forth empirical chapter implies with the marginal benefit allocation and DEA tech to figure out the allocation mechanism of the inter-governments transfer from a dynamic and incremental aspect. The results showed that the earmarked payments and some general payment with some earmarked characteristics are'pro-rich'in allocation process. On the other side, as the public supporting staff and expense responsibility are the most important elements when the transfer is allocated, it makes the general transfer playing negative to the public services'productivity. When others keep constant, the poor areas are more inclined to decrease the financial effort and just increase the staff and enhance their wages, which would make them easier to get more general transfer next year. This requires the governments to establish proper inspiration and supervision mechanism, impelling the production unit to enhance productivity. More specific, the allocation formula should not just focus on feeding the public staff and make up the expenses gap. Instead, the general transfer allocation mechanism should pay more attention to the real needs and the real production cost. And, the interference of some non-regular elements should be brought down to the least when deciding who can get the earmarked transfer.The fifth empirical chapter is also based on the quasi-experiment of decentralization, with which it studied the way that how the allocation mechanism could be turned over. It found that delegating the decision power and enhancing the financial status of primary governments, as well as smoothing the channel of needs delivery, could really change the inferior position of poor areas when asking for financial transfers. So breaking the discriminate governing pattern and endow the rural areas the same equal status with urban areas. Keep the public funds from exploiting by the upper level and smooth the public information delivery channel.