Efficient Scale of Local Government in China: Quantile Regression Approach to County-Level Data

Mototsugu Fukushige () and Yingxin Shi ()
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Yingxin Shi: Department of Economics & Management, Dalian Nationalities University

No 14-15, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: We investigate the effects of urban and rural populations and area sizes on the expenditures of the prefecture-level local government. We found the following three results. The first relates to the expenditure for urban populations. At around 220,000 people, per capita local government expenditure is minimized in our simulation. The second is that the expenditure for rural populations is proportional to the population size. The third finding is that the expenditure in accordance with the areas is also proportional to the area size. This cost structure is the reason why China fs recent rapid urbanization increases prefectural government fs fiscal distress.

Keywords: Efficient scale; Local government; Quantile regression; China (search for similar items in EconPapers)
JEL-codes: H40 H72 R51 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014-04
New Economics Papers: this item is included in nep-ger, nep-pbe, nep-tra and nep-ure
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