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| How does Fiscal Pressure Influence the Provision of Public Services at County Level？ |
| YU Jingwen, CHEN Xiaoguang, GONG Liutang
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International Business School, Beijing Foreign Studies University;
The National Institute for Fiscal Studies,Tsinghua University;
Guanghua School of Management and LMEQF, Peking University |
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Abstract Using the DID approach based on the quasi-experiment of nation-wide abolition of agriculture tax in 2005, this paper identifies the impact of fiscal pressure on the provision of public services at the county level. The empirical results show that fiscal pressure has negative effect on the county-level public education. Governments which suffered more fiscal revenue loss due to the agriculture tax abolition would tend to spend less on education. In addition, we also find that there is greater and more lasting negative effect in the long term. These basic results are robust to a number of specification tests on different fiscal shock index measurements, sample heterogeneity and other reforms which took place in the same period.
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Received: 12 December 2016
Published: 01 January 1900
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