Examining the Impact of Fiscal Resources on Anti-Poverty Expenditure: Evidence from China

Abstract

In developing countries, anti-poverty programs are often implemented by local governments. However, due to the limitation of fiscal resources, the amount of anti-poor expenditure by the local government is generally less than what is needed for the poor. In this paper, we investigate whether an increase in the fiscal resources of local government will lead to an increase in anti-poor fiscal expenditure using county-level Chinese data. Using the fixed effect model, we show that local governments will put more fiscal resources into the minimum living standard guarantee (MLSG) system if they receive more intergovernmental transfers from high-level governments, but this effect only exists in urban areas. Moreover, the off-budget fiscal revenue does not affect the anti-poverty expenditure, both in rural and urban areas.