Logo
Munich Personal RePEc Archive

Identifying the Flypaper Effect in the Presence of Spatial Dependence: Evidence from Education in China’s Counties

Yu, Yihua and Wang, Jing and Tian, Xi (2013): Identifying the Flypaper Effect in the Presence of Spatial Dependence: Evidence from Education in China’s Counties. Forthcoming in: Growth and Change

[thumbnail of MPRA_paper_61616.pdf]
Preview
PDF
MPRA_paper_61616.pdf

Download (605kB) | Preview

Abstract

In the context of China without a median voter system, this study examines whether the “flypaper effect”, an unconditional lump-sum grant from the upper governments to the county governments increases spending in a greater proportion than an equivalent rise in local income, holds true in China. Using China’s county-level education data during 2007, the models have been estimated using a spatial econometric technique that accounts for spatial interaction behavior on public education expenditure across local governments. We find that, in the presence of spatial interdependence, there is no evidence of a “flypaper effect” when different spatial weighting schemes and the endogeneity problem of education grants are accounted for. Rather, the “anti-flypaper effect” is found. Important policy implications are drawn for China’s fiscal decentralization reform.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.