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Removing the “Hats of Poverty”: Effects of ending the national poverty county program on fiscal expenditures

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  • Zhu, Jiong
  • Liu, Shouying
  • Li, Yihao

Abstract

This paper investigates the effect of the cancellation of China's program of “national poverty counties”—a place-based policy—on county-level fiscal expenditures. Our difference-in-differences results indicate that the cancellation reduces the county fiscal expenditure-to-GDP ratio by an average of 3.78%. To support a causal interpretation of these findings, we provide two plausible explanations, the reverse flypaper effect and the active/passive waste effect. Our findings survive the consideration of selection bias, omitted-variable bias, and spatial correlation. Policy implications of our findings are also discussed.

Suggested Citation

  • Zhu, Jiong & Liu, Shouying & Li, Yihao, 2021. "Removing the “Hats of Poverty”: Effects of ending the national poverty county program on fiscal expenditures," China Economic Review, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:chieco:v:69:y:2021:i:c:s1043951x21000912
    DOI: 10.1016/j.chieco.2021.101673
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    Cited by:

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    More about this item

    Keywords

    China; Fiscal expenditure; National poverty county; Place-based policy; Poverty program;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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