Government Expenditures and Equity of Opportunity in China

Abstract

Using the China Health and Nutrition Survey (CHNS) data, this paper explores the impacts of government expenditures on equity of opportunities in China by estimating intergen-erational income mobility in provinces with different size of government expenditures. We find that China's government expenditures, especially spending on education, health and social welfare can enhance intergenerational income mobility and therefore improve the equity of opportunity. In contrast, government spending on infrastructures has no significant impacts on intergenerational income mobility. This paper provides empirical support to the structural reform of government expenditures in China.