The Impact of Per-Capita Transfer Payment on the Stabilization of Local Fiscal Expenditure

Abstract

The transfer payment should exert the economic and social stability effect. However, the empirical data show that the total amount of transfer payment varies greatly in different regions and deviates from the goal of the transfer payment system to a certain degree. If per-capita transfer payment is adopted as the analysis variable, from 1998 to 2015, 31 provincial government financial data were used to empirically test the impact of per-capita transfer payment on the stability of provincial fiscal expenditures. Based on the analysis of the influence of fiscal self-sufficiency and the 5 types of fiscal expenditures closely related to economic and livelihood stability, we can find that the per-capita transfer payment has a significant negative correlation with the stable effect of fiscal expenditure, while the effect of fiscal self-sufficiency on the provincial financial expenditure has no significant effect. Science and Technology Expenditure, Medical Expenditure on the stability of local fiscal expenditure has a more significant negative effect. The influence of Educational Expenses on the stabilizing effect of local fiscal expenditure is not significant. Social Security Expenditure has the same effect as Cultural Expenditure, and has a significant positive impact on the stability of local fiscal expenditure. In order to further enhance the stabilizing effect of transfer payment on local fiscal expenditure, we should improve the current transfer payment system and improve the fiscal expenditure structure of local governments.