Are there demonstration effects of fiscal expenditures on higher education in China? An empirical investigation

Weiwei Wu and Jiandong Zhu

International Journal of Educational Development, 2021, vol. 81, issue C

Abstract: This paper investigates the spatial demonstration effects of local governments' fiscal expenditures on higher education in China. Using regional panel data from 1999 to 2015 and spatial econometric models, this paper finds that the developed region of Eastern China has not shown greater willingness to spend on higher education than the less developed regions of Central and Western China. Local governments' fiscal expenditures on higher education have significant spatial demonstration effects, which are strongest in Central China. The attenuation boundary test shows that, as the economic distance increases, the demonstration effect becomes weaker. Econometric models, including the interaction of economic growth and the spatial lag term show that the demonstration effect is enhanced by economic growth. Henceforth, this paper concludes that, to increase fiscal expenditures on higher education in China and save incentive costs, with the local governments being the main investors, the central government can achieve the goal of increasing the total fiscal expenditures on higher education by exerting the spatial demonstration effect. It will eventually drive local governments to spend more on higher education by strongly encouraging others beforehand.

Keywords: Fiscal expenditures on higher education; Demonstration effect; Spatial autoregressive model; China (search for similar items in EconPapers)
JEL-codes: C31 I22 I24 I28 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0738059320305046
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:injoed:v:81:y:2021:i:c:s0738059320305046

DOI: 10.1016/j.ijedudev.2020.102345

Access Statistics for this article

International Journal of Educational Development is currently edited by Stephen P Heyneman

More articles in International Journal of Educational Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().