Removing the “Hats of Poverty”: Effects of ending the national poverty county program on fiscal expenditures

Jiong Zhu, Shouying Liu and Yihao Li

China Economic Review, 2021, vol. 69, issue C

Abstract: This paper investigates the effect of the cancellation of China's program of “national poverty counties”—a place-based policy—on county-level fiscal expenditures. Our difference-in-differences results indicate that the cancellation reduces the county fiscal expenditure-to-GDP ratio by an average of 3.78%. To support a causal interpretation of these findings, we provide two plausible explanations, the reverse flypaper effect and the active/passive waste effect. Our findings survive the consideration of selection bias, omitted-variable bias, and spatial correlation. Policy implications of our findings are also discussed.

Keywords: China; Fiscal expenditure; National poverty county; Place-based policy; Poverty program (search for similar items in EconPapers)
JEL-codes: H30 R10 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:69:y:2021:i:c:s1043951x21000912

DOI: 10.1016/j.chieco.2021.101673

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