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Are there demonstration effects of fiscal expenditures on higher education in China? An empirical investigation

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  • Wu, Weiwei
  • Zhu, Jiandong

Abstract

This paper investigates the spatial demonstration effects of local governments' fiscal expenditures on higher education in China. Using regional panel data from 1999 to 2015 and spatial econometric models, this paper finds that the developed region of Eastern China has not shown greater willingness to spend on higher education than the less developed regions of Central and Western China. Local governments' fiscal expenditures on higher education have significant spatial demonstration effects, which are strongest in Central China. The attenuation boundary test shows that, as the economic distance increases, the demonstration effect becomes weaker. Econometric models, including the interaction of economic growth and the spatial lag term show that the demonstration effect is enhanced by economic growth. Henceforth, this paper concludes that, to increase fiscal expenditures on higher education in China and save incentive costs, with the local governments being the main investors, the central government can achieve the goal of increasing the total fiscal expenditures on higher education by exerting the spatial demonstration effect. It will eventually drive local governments to spend more on higher education by strongly encouraging others beforehand.

Suggested Citation

  • Wu, Weiwei & Zhu, Jiandong, 2021. "Are there demonstration effects of fiscal expenditures on higher education in China? An empirical investigation," International Journal of Educational Development, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:injoed:v:81:y:2021:i:c:s0738059320305046
    DOI: 10.1016/j.ijedudev.2020.102345
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    Citations

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    Cited by:

    1. Mei Wang & Yifan Zheng & Shaojun Ma & Jun Lu, 2024. "Does higher vocational education matter for rural revitalization? Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    2. Borsi, Mihály Tamás & Valerio Mendoza, Octasiano Miguel & Comim, Flavio, 2022. "Measuring the provincial supply of higher education institutions in China," China Economic Review, Elsevier, vol. 71(C).

    More about this item

    Keywords

    Fiscal expenditures on higher education; Demonstration effect; Spatial autoregressive model; China;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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