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Spatial Decomposition of Funding Inequality in China’s Basic Education: A Four-Level Theil Index Analysis

Author: WEN WANG and ZHIRONG ZHAO
Published in PFM, Vol. 14 No. 4

Various education finance and taxation reforms in the past several decades have substantially changed China’s system for funding basic education, but the present system is still characterized by insufficient funding and large inequalities across localities. Using data of more than 2000 county-level units all over the country during 1998-2005, this study uses Theil index to spatially decompose the pattern of funding inequality in China’s basic education across four geographic and administrative levels. The analysis shows that the level of inequality remained high after the rural taxation and education finance reforms since 2000, despite the efforts to increase education-purpose fiscal transfers to local governments, and that the gaps are especially severe across provinces in the same region and across prefectures in the same province.

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