Local Fiscal Pressure and Public Health: Evidence from China

Abstract

Under the dual challenges of global downward economic pressure and the COVID-19 pandemic, studying the impact of local government fiscal pressure on public health is a meaningful endeavor. First, this paper analyzes the impact of local government fiscal pressure on public health and clarifies its impact mechanisms. Second, by utilizing panel data of 31 Chinese provinces from 2000 to 2020, two-way fixed-effects and mediating-effects models are developed to identify the effects and impact mechanisms of local government fiscal pressure on public health. The results show that local government fiscal pressure can be detrimental to public health through three main mechanisms: reducing public health fiscal expenditures, hindering industrial structure upgrading, and exacerbating environmental pollution. Heterogeneity analysis finds that the negative effects of local government fiscal pressure on public health mainly exist in Central and Western China. Accordingly, three policy implications are proposed: optimizing the fiscal system, accelerating industrial upgrading, and improving the appraisal system of local officers.

Coupling coordination of the provision of medical services and high-quality economic development in the Yangtze River Economic Belt

“…When local governments have insufficient financial resources of their own and must rely on financial assistance from the central government to fulfill their responsibilities for authority expenditure, the effectiveness of local public goods provision is impaired (46,47). Some studies have found that fiscal decentralization can empower local governments to meet the public preferences of residents in their jurisdictions in a timely manner (48), and that expanding the taxation power of local governments can improve local healthcare services by optimizing the structure of fiscal expenditure (49,50). An appropriate degree of fiscal autonomy can also help promote HED.…”