Research on the Relationship between Fiscal Expenditure and Educational Equity

Ouyang Yiyi

(School of Economics and Management　Wuhan University,Wuhan　Hubei　430072)

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Research on the Relationship between Fiscal Expenditure and Educational Equity

Ouyang Yiyi

(School of Economics and ManagementWuhan University,WuhanHubei430072)

Ⅰ.Analysis of causality between fiscal expenditure and educational equity in China

1.Insufficient educational investment

Related researches show that,in 38 countries with the population exceeding 10 million including Britain,America and Japan,the correlation influence between the government investment in education and per capita GDP is expressed as follows:when the per capita GDP is USD 300,the proportion of the educational expenditure shall be no lower than 3.29%;when the per capita GDP is USD800-1000,the proportion of the educational expenditure shall be no lower than 4.06%-4.24%.However,the fiscal expenditure on education in China has always accounted for a low proportion in the aggregate expenditure.The fiscal expenditure on education in China achieves sustained and steady increase in the total quantity,but it still has a large gap with the developed countries and many developing countries in terms of public education expenditure level.The fiscal expenditure on education not only depends on its own growth speed,but is also limited to the growth rate of the fiscal revenue and GNP.Insufficiency of total fiscal expenditure on education will directly make it difficult for the government to allocate the educational resources and to promote the educational equity.Therefore,insufficiency of the fiscal expenditure on education is the immediate cause for educational inequity in China.

2.Large gap of educational investment between urban and rural areas and regions

The extreme imbalance of economic development between urban and rural areas and regions in China results in remarkable difference in educational investment between urban and rural areas and regions.The economic level backwardness hinders rural educational development and the educational level backwardness also hinders improvement of the rural labor force quality,thus forming a vicious circle.Therefore,the central finance is required to play a role and increase educational grants in rural areas.The governments in various regions are difficult to achieve balance of the educational resources between regions and the urban and rural areas through their own financial resources.If the education,as a commodity of public nature,is only deployed by the market,the market will be out of order.Therefore,the central government shall give full play to the resource allocation functions and use transfer payment and other means to promote allocation balance of educational resources in various regions.

3.Large gap of allocation of educational resources between different classes

China’s educational level has developed rapidly in last decade.However,with the enlargement of the gap in social classes,the gap of allocation of educational resources between different classes is gradually increased and the family members at the advantageous class can obtain better educational resources.The key middle schools with high education quality are concentrated on the big cities with developed economic level.Moreover,the students at advantageous class often have the family background of higher cultural level.According to the results of MyCOS Research,the children of farmers and migrant workers,industry and service staff mostly attend higher vocational colleges,while the children at the management class mostly attend “211” colleges and universities.The children at the advantageous social class mostly receive higher education,while the disadvantageous class in rural and remote areas can often receive primary and secondary education.Different initial conditions of individual property rights result in differences in educational resources enjoyed by individuals.The government shall narrow the gap of educational resources between the classes by cost subsidizing for education services consumption.

Ⅱ.Analysis of correlation between fiscal expenditure and educational equity in China

1.Analysis with the variable of total fiscal expenditure on education

Fiscal expenditure,also called public expenditure,refers to the expenditure of the government to provide public products and services and to meet the social public demands under the market economy conditions.It is the process of national distribution and use of fiscal revenue and belongs to the second stage of the whole financial distribution.Educational finance is national management of educational funds and other relevant educational resources,including national supervision of financing,distribution and use of educational funds and other relevant educational resources.After the reform tax system,the rural compulsory education is shocked seriously and many rural primary and secondary schools are caught in financial crisis due to serious inadequacy of government fiscal appropriation.The outstanding performance is unpaid teachers’ wages in rural primary and secondary schools and heavy school debts.

2.Analysis with the variable of structure of fiscal expenditure on education

In terms of regional structure,the fiscal expenditure on education may be divided into the education expenditure in the eastern,middle and western areas and the urban and rural education expenditure;in terms of hierarchical structure,the fiscal expenditure on education may be divided into primary education expenditure,secondary education expenditure and higher education expenditure.The relationship between the fiscal expenditure structure and educational equity will be analyzed below from the two aspects.

(1) Regional structure analysis

The economic development gap between the eastern,middle and western areas and the urban and rural areas is the main reason for educational inequity between the areas and urban and rural areas.Because of history,environment and territory,the economic level in the eastern areas is far superior to that in the central and western areas.The allocation of educational resources is not balanced;the educational resources in the east are richest,followed by the middle and in the west are most deficient.The education expenditure in three areas shows decreasing cascade and the cascade gap is increasing.The education expenditure in the eastern areas was twice the total education expenditure in the middle and western areas in 1995 and 2.3 times in 2012.

China is in the environment of urban-rural dual economic structure,so that the current education system in China is an education system under the urban-rural dual structure and the education development basically depends on the economic development degree in the urban and rural areas and the investment of local governments in educational expenditure.In the same year,the per capita disposal income of the urban residents was 24564.7yuan and of rural residents was 7916.6yuan.The low fiscal expenditure on education and per capita income affect the quantity and quality of preliminary education in rural areas,increase the private education costs of farmers and increase the urban and rural gap.In addition to the gap between the urban and rural educational expenditure and resident income,the gap between urban and rural educational resources is also large and the faculty and teaching infrastructure in rural areas lag far behind that in the cities.

China’s fiscal expenditure on education is characterized by eastern,middle and western gap and urban and rural gap in terms of regional structure.Optimizing the regional structure of the fiscal expenditure on education means that the government shall strive to improve the current situation of education in the middle and western areas and rural areas,establish and improve the educational assistance system,achieve inclination of educational resources to the middle and western areas and to the rural areas,narrow the regional development gap of education and promote educational equity.

(2) Hierarchical structure analysis

The hierarchical investment structure of education also plays an important role in the educational equity.Deng Xiao Jun and Cheng Jie (2009) measured and calculated the rational proportion of three-level financial education investment of the country at different stages of economic development according to 50 national educational investment structures with different economic development level.The per capita GDP was USD5437 in China in 2011.Compared with the rational proportion of three-level financial education investment,the investment in higher education is slightly high and in primary education is low in China,consistent with the practical situation in China.In recent years,the scale of higher education in China expands rapidly and the primary and secondary education is relatively recessed.The country decided to expand the college’s recruiting students scale in 1999 and the financial investment in higher education is increasing subsequently.In 2006,the higher education expenditure accounted for 52% of fiscal expenditure on education,while the secondary education expenditure and primary education expenditure accounted for 30.90% and 31.35% respectively.

Education is mixed goods of public nature and its guarantee level shall match the publicity at various education stages.The scope of the objects receiving primary education is widest,so the country shall focus on development of primary education,improve the primary education quality,implement the nine-year compulsory education and promote educational equity.

The above analysis shows that the optimization degree of the structure of the fiscal expenditure on education shows positive correlation with educational equity.Narrowing the regional gap of the fiscal expenditure on education and increasing the investment proportion of the primary education are conductive to promoting educational equity and improving the educational development level.

Ⅲ.Conclusion and policy recommendations

This paper discusses the causality between fiscal expenditure and educational equity through the current situation and reason analysis of the educational equity in China,discusses the correlation between fiscal expenditure and educational equity with the variables of the total fiscal expenditure on education and the structure of fiscal expenditure on education respectively and draws the following conclusions:the reasons for educational inequity at the present stage mainly include 1) Insufficient educational investment;2) Large gap of educational investment between urban and rural areas and regions;3) Large gap of allocation of educational resources between different classes.Insufficient fiscal expenditure on education and failure to play the role of the fiscal expenditure in promoting fair allocation of educational resources result in educational inequity at the present sage.The total fiscal expenditure on education is positively correlated to the educational equity,and improving the fiscal expenditure on education is an effective means to promote educational equity;the optimization degree of the structure of the fiscal expenditure on education is positively correlated to educational equity.High optimization degree means that the government achieves inclination of educational resources to middle and western areas and rural areas and to primary education through fiscal expenditure on education,so as to promote educational equity.Therefore,the following policy recommendations are made in this paper:

1.The total fiscal expenditure on education is positively correlated to educational equity and the educational expenditure is insufficient in China at present stage.The government shall increase the fiscal expenditure on education,effectively give priority to guarantee the educational expenditure and improve the proportion of education expenditure in the fiscal expenditure to achieve the objective of the educational expenditure accounting for 4% in GDP.

2.Achieve inclination of educational resources to the middle and western areas and rural areas;improve the financial transfer payment system and strengthen the education infrastructure construction in the middle and western areas and rural areas;establish the rural teachers’ salary safeguard mechanism,gradually eliminate the regional differences of the wage and treatment of the compulsory education teachers and safeguard the rights and interests of the rural teachers;promote circulation and periodic rotation of compulsory education teachers within a broader scope,so as to ensure the teacher quality in remote rural primary and secondary schools and guarantee improvement of the educational service level for the primary and secondary students in outlying poverty-stricken areas;

3.Narrow the gap of allocation of educational resources at different classes.Improve the quality of education of the weak classes by improving the student education loans and subvention system,scholarship system and tuition exemption system,combine the government financial allocation with social aids,actively strive to set scholarship by all sectors of society in the schools and ensure arrival of legal fiscal expenditure on education in full and on time to ensure implementation of the funds for poverty students.In addition,it is required to weaken the concept of key middle schools,key primary schools and other “elite schools” in big cities and promote equilibrium assignment of excellent teachers in various schools,such as gradual implementation of the school district system in the cities and towns to ensure that different classes may receive high-quality educational resources;

4.Intensify the fiscal expenditure investment in primary education.On the basis of expanding the total fiscal expenditure on education,increase the proportion of investment in primary education,clarify the responsibilities of the governments at all levels,determine the rational proportion of expenditure,improve the compulsory education expenditure guarantee mechanism and continue to promote balanced development of compulsory education nationwide.

Notes:

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Educational equity is important foundation to achieve social equity and to build a harmonious society,and fiscal expenditure is an important means for the government to allocate resources.However,educational inequity is very common in China at present.Through logical analysis of the relationship between the fiscal expenditure and the educational equity in this paper,it is found that the insufficiency of total fiscal expenditure is the main reason for educational inequity at the present stage;the total fiscal expenditure on education shows positive correlation with the educational equity;the optimization degree of the structure of the fiscal expenditure on education shows positive correlation with the educational equity.Therefore,the government shall expand the scale of the fiscal expenditure on education and optimize the structure of the fiscal expenditure on education.

fiscal expenditure on education;educational equity;logical analysis

About the author：Ouyang Yiyi,students at School of Economics and Management,Wuhan University.