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Efficient Scale of Local Government in China: Quantile Regression Approach to County-Level Data

Author

Listed:
  • Mototsugu Fukushige

    (Graduate School of Economics, Osaka University)

  • Yingxin Shi

    (Department of Economics & Management, Dalian Nationalities University)

Abstract

We investigate the effects of urban and rural populations and area sizes on the expenditures of the prefecture-level local government. We found the following three results. The first relates to the expenditure for urban populations. At around 220,000 people, per capita local government expenditure is minimized in our simulation. The second is that the expenditure for rural populations is proportional to the population size. The third finding is that the expenditure in accordance with the areas is also proportional to the area size. This cost structure is the reason why China fs recent rapid urbanization increases prefectural government fs fiscal distress.

Suggested Citation

  • Mototsugu Fukushige & Yingxin Shi, 2014. "Efficient Scale of Local Government in China: Quantile Regression Approach to County-Level Data," Discussion Papers in Economics and Business 14-15, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1415
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    More about this item

    Keywords

    Efficient scale; Local government; Quantile regression; China;
    All these keywords.

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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