Examining the Impact of Fiscal Resources on Anti-Poverty Expenditure: Evidence from China

Abstract

In developing countries, anti-poverty programs are often implemented by local governments. However, due to the limitation of fiscal resources, the amount of anti-poor expenditure by the local government is generally less than what is needed for the poor. In this paper, we investigate whether an increase in the fiscal resources of local government will lead to an increase in anti-poor fiscal expenditure using county-level Chinese data. Using the fixed effect model, we show that local governments will put more fiscal resources into the minimum living standard guarantee (MLSG) system if they receive more intergovernmental transfers from high-level governments, but this effect only exists in urban areas. Moreover, the off-budget fiscal revenue does not affect the anti-poverty expenditure, both in rural and urban areas.

Does Fiscal Decentralization Reduce Poverty? An insight from provincial level analysis in Pakistan

“…The results indicate that increasing expenditure decentralization by 1% will reduce poverty by 1.8%. These results align with the study conducted by Faridi and Nazar (2013) and Zheng et al (2023).…”

“…FD is still a debated topic for policymakers regarding resource utilization and its role in reducing poverty at the lower level of administration (province or state) in a country. The literature on FD and its impact on poverty reduction suggests contradictory results (Arham, Humalinggi, Tantawi, & Kusuma, 2024;Bardhan & Mookherjee, 2005;Zheng et al, 2023;Zhou et al, 2023). The differentials in results are due to the various proxies used to measure FD, various proxies used to measure poverty, model formation, and, lastly, country and region selection for a particular study.…”

“…The main reason for such a result is the narrow tax base and generation of tax revenue through indirect taxes, which ultimately reduce the fiscal capacity of the provinces. Another reason for such a result is the ambiguity of boundaries between federal and provincial governments regarding the type of tax collection (Amaluddin, Payapo, Laitupa, & Serang, 2018;Wang et al, 2023;Zheng et al, 2023) The turning point of the inverted U-shaped relationship is calculated at 5, which narrates that the revenue decentralization should be more than 5% for the marginal provinces to reduce their poverty level if poverty is measured through IWI. The turning point for model 2 is 4.7 % when poverty is measured through MPI.…”

Assessing the Drivers of Sustained Agricultural Economic Development in China: Agricultural Productivity and Poverty Reduction Efficiency

“…Conversely, if economic growth is accompanied by worsening income inequality, poverty may increase rather than decrease. Because of this obvious negative effect of income disparity on poverty reduction, relevant scholars have also conducted a lot of research on the effect of factors such as distribution structure, transfer payments, and fiscal allocation on poverty reduction [13][14][15].…”

The Effect of Institutional Quality on Economic Growth: Evidence from Tripartite Approaches in the Context of War-Torn Countries

“…Rationally, if a long-run association is discovered among the variables, carrying out a co-integration to ascertain the robustness of the model is necessary (Olamide et al, 2022;Liu & Zhang, 2022;Sultana et al, 2022). Finally, due to the panel data structure of the study and because the model incorporates a small number of years, we tested the fixed-effects model to observe the effect of the variables (Prenovitz et al, 2023;Zheng et al, 2023). Furthermore, the GDP annual growth of war-torn countries is adopted to measure the economic situation.…”