Study On The Impact Of Fiscal Decentralization On The Firm Size Distribution

The firm size distribution is an important part of the market economy system.Its unifonnity reflects the degree of the local economic environment and reflects the overall economic development environment of a country to some extent.In order to deepen fiscal decentralization reform,it is of great practical significance to study the impact of fiscal decentralization on the firm size distribution in order to promote the sound development of the market economy and deepen fiscal decentralization reform.In this paper,firstly,we combed the studies on fiscal decentralization and the distribution of firm size in recent years through literature research,and made a detailed factual explanation on the degree of fiscal decentralization and the firm size distribution in 30 provinces in China.Through the analysis of the provincial panel data from 2001 to 2013 in China,it was found that the Pareto index in China was clearly less than 1 and deviated from the Zipf distribution.The trend of fiscal income decentralization and fiscal expenditure decentralization remained basically the same,and most of the provinces in the country were in a steady upward trend.Secondly,the in-depth study of the mechanism of fiscal decentralization on the distribution of the firm size.This paper analyzes the impact of the fiscal expenditure decentralization(fde)and fiscal income decentralization(fdi)on the distribution of the firms,and finds that decentralization of fiscal expenditures affects the government’s public financial expcenditures,such as increasing the proportion of infrastructure or administrative expenditure,which make the distribution of the firm size tend to be even.This paper thus puts forward the first hypothesis that the decentralization of fiscal expenditure is positively related to the Pareto index and will make the fim size distribution is more even.The decentralization of fiscal income influences the firm size distribution through taxation tools.Because of the competition effect among governments,the government tends to encourage the development of large-scale enterprises with large tax contribution,and thus the firm size distribution tends to be uneven.So put forward the second hypothesis that decentralization of fiscal income will reduce the Pareto index and make the company size distribution tend to be uneven.Finally,empirical conclusions of’ various panel data models are used to draw conclusions and propose policy recommendations.The study found that there is a significant positive correlation between the increase in the decentralized level of fiscal expenditure(fde)and the increase in the Pareto index that represents the size distribution of Chinese firms.Each increase in fiscal decentralization(fde)can make Pareto index increased by about 0.18,which led to the distribution of the firm size in the region to the Zipf distribution.The fiscal income decentralization(fdi)has a significant negative impact on the size of the company.Each increase of 1 unit will reduce the Pareto index by about 0.20,and the distribution of the firm size will further deviate from the Zipf distribution.The research conclusions verify the hypothesis well.The method of calculating the Pareto coefficient was proved to be robust.At the last,the paper proposes some policy suggestions such as enforcing the power of affairs,controlling competition among local governments,deepening state-owned enterprise reform,supporting the innovative medium and small firms and so on.