Fiscal Decentralization,Public Preferences and Social Security Expenditure:An Empirical Study Based on Provincial Panel Data

Abstract

This paper selects potential proxy variables of public preference, analyzes the impact mechanism between public preference and social security expenditure, and focus on the relationship among fiscal decentralization, public preference and social security expenditure by using provincial panel data (1998-2006). The result shows that fiscal decentralization measured by different indicators is significantly correlative with fiscal social security expenditure and exists spatial heterogeneity. The decentralization of fiscal revenues and degree of fiscal self-financing are significantly negative with social security expenditure, while the decentralization of fiscal expenditure is significantly positive with social security expenditure. The potential proxy variables of public preference are less significantly with local governments′ social security expenditure behavior, which suggests the fact that the vertical social security expenditure mechanism is yet responded affectively to social pension voices.