IDEAS home Printed from https://ideas.repec.org/p/osk/wpaper/1415.html
   My bibliography  Save this paper

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 and Osaka School of International Public Policy (OSIPP).
    • Handle: RePEc:osk:wpaper:1415
    as

    Download full text from publisher

    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1415.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Tao, Hung-Lin & Yuan, Ming-Ching, 2005. "Optimal scale of a public elementary school with commuting costs--a case study of Taipei county," Economics of Education Review, Elsevier, vol. 24(4), pages 407-416, August.
    2. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    3. Lichtenberg, Erik & Ding, Chengri, 2009. "Local officials as land developers: Urban spatial expansion in China," Journal of Urban Economics, Elsevier, vol. 66(1), pages 57-64, July.
    4. Craig, Steven G., 1987. "The impact of congestion on local public good production," Journal of Public Economics, Elsevier, vol. 32(3), pages 331-353, April.
    5. Shelton, Cameron A., 2007. "The size and composition of government expenditure," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2230-2260, December.
    6. Bodkin, Ronald G & Conklin, David W, 1971. "Scale and Other Determinants of Municipal Government Expenditures in Ontario: A Quantitative Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 12(3), pages 465-481, October.
    7. Hochman, Oded & Pines, David & Thisse, Jacques-Francois, 1995. "On the Optimal Structure of Local Governments," American Economic Review, American Economic Association, vol. 85(5), pages 1224-1240, December.
    8. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731.
    9. David N King & Yue Ma, 2000. "Local authority size in theory and practice," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 18(3), pages 255-270, June.
    10. Leigh Drake & Richard Simper, 2002. "X-efficiency and scale economies in policing: a comparative study using the distribution free approach and DEA," Applied Economics, Taylor & Francis Journals, vol. 34(15), pages 1859-1870.
    11. Duncombe, William & Miner, Jerry & Ruggiero, John, 1995. "Potential cost savings from school district consolidation: A case study of New York," Economics of Education Review, Elsevier, vol. 14(3), pages 265-284, September.
    12. Chun-Chung Au & J. Vernon Henderson, 2006. "Are Chinese Cities Too Small?," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 549-576.
    13. World Bank, 2007. "China : Improving Rural Public Finance for the Harmonious Society," World Bank Other Operational Studies 7664, The World Bank.
    14. Gyimah-Brempong, Kwabena, 1989. "Production of Public Safety: Are Socioeconomic Characteristics of Local Communities Important Factors?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(1), pages 57-71, Jan.-Mar..
    15. Baleiras, Rui Nuno, 2001. "To Fragment or to Consolidate Jurisdictions: the Optimal Architecture of Government," FEUNL Working Paper Series wp401, Universidade Nova de Lisboa, Faculdade de Economia.
    16. Steven G. Craig & Eric J. Heikkila, 1989. "Urban Safety in Vancouver: Allocation and Production of a Congestible Public Good," Canadian Journal of Economics, Canadian Economics Association, vol. 22(4), pages 867-884, November.
    17. Andrews, Matthew & Duncombe, William & Yinger, John, 2002. "Revisiting economies of size in American education: are we any closer to a consensus?," Economics of Education Review, Elsevier, vol. 21(3), pages 245-262, June.
    18. Roy Bahl & Jorge Martinez-Vazquez, 2003. "Fiscal Federalism and Economic Reform in China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0313, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    19. Edwards, John H. Y., 1990. "Congestion function specification and the "publicness" of local public goods," Journal of Urban Economics, Elsevier, vol. 27(1), pages 80-96, January.
    20. Tsui, Kai-yuen, 2005. "Local tax system, intergovernmental transfers and China's local fiscal disparities," Journal of Comparative Economics, Elsevier, vol. 33(1), pages 173-196, March.
    21. John I Carruthers & Gudmundur F Ulfarsson, 2003. "Urban sprawl and the cost of public services," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 30(4), pages 503-522, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Efficient scale; Local government; Quantile regression; China;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osk:wpaper:1415. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Atsuko SUZUKI). General contact details of provider: http://edirc.repec.org/data/feosujp.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.