Causal Effect Of The "New Mechanism" Reform For Rural Compulsory Education On Public Expenditure Of County-level Government For Compulsory Education In China

Since the mid-1980 s,the financial system of compulsory education in our country experienced a series of complex and complicated changes,but insufficiency and imbalanced allocation of educational investment have not been resolved effectively.In this context,central government put forward to implement the new safeguards mechanism of the rural compulsory education funds(hereinafter referred to as the “new mechanism” reform)in the late 2005.With the implementation of the“new mechanism”reform,rural compulsory education funds were accepted into the government budget,and the mechanism that central and local governments undertake the compulsory education funds on the basis of the items and proportions was established.The implementation of the“new mechanism”reform has a significant impact on the development of compulsory education in our country.Before the implementation of the“new mechanism”reform,public funds for compulsory education come mainly from tuition and fees.This reform exempts the tuition and fees of students in the compulsory education stage,and large-scale subsidies were allocated to county-level local government in order to increase the level of public expenditure.Nevertheless,there are few scientific evaluations on the effect of the“new mechanism”reform,especially on the effect of the reform on public expenditure.Leveraging on the county-level data from 2005 to 2006,this paper analyses the effect of the“new mechanism”reform on the level and difference of average budgetary public expenditure of county-level government for compulsory education in China.Causal analysis must be highlighted in scientific evaluations.Therefore,“propensity score matching” was used together with “double difference” to peel off the effect of the reform among many possible factors.In this way,the evaluation on the effect of the“new mechanism”reform has a causal significance.Firstly,based on the national sample,the“new mechanism”reform had a positive effect.The public expenditure for primary school was raiesd by 76.06-101.69 yuan per student,and the public expenditure for junior middle school was increased by83.64-186.46 yuan per student.Secondly,based on the urban sample and rural sample,the reform increased the public expenditure for both primary school and middle school.By comparing the increment of public expenditure in urban with that in rural,the reform tended to widen the public expenditure gap between urban and rural.Lastly,based on the sample of east region and midwest region,the reform had no significant effect on the public expenditure for compulsory education in the east region.However,the public expenditure for compulsory education in the midwest region got increased drastically.It turned out that the“new mechanism”reform narrowed the regional disparity of public expenditure for compulsory education.On the basis of the conclusions above,this paper put forward four recommendations on the further adjustment and formulation for compulsory education fiscal policy in China.Firstly,deepening the reform that provincial government take direct control of country-level government,which can enhance the fiscal capacity of country-level government.Secondly,improving the assessment mechanism of government's achievement to make country-level government pay more attention to compulsory education.Secondly,perfecting the intergovernmental transfer payment system of compulsory education.At the end,improving the fiscal appropriation system of compulsory education.