Author(s)

Xueting Wang, Shuguang Wang

Corresponding Author

Shuguang Wang

Abstract

The current fiscal framework in China demonstrates significant vertical imbalance, wherein sub-national administrations experience constrained revenue-generating capacities relative to their expanding public service obligations. This structural discrepancy has precipitated acute fiscal stress across local governance units. In this context, Examining the correlation between fiscal constraints and the delivery capacity of essential public services represents a critical research imperative, particularly within the context of social welfare provision and livelihood security.Based on a balanced panel data set of 30 provincial-level regions in China from 2010 to 2023, empirical analysis reveals that fiscal pressure has severely constrains the improvement of basic public services in the people's livelihood domain. This conclusion is robust to various tests and is further shown to vary regionally, with a more pronounced negative impact in the central and western regions. Additionally, fiscal transfer payments can significantly mitigate the negative consequence of fiscal pressure on these services.

Keywords

fiscal pressure; transfer payments; fundamental public services in the livelihoods sector