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Decomposing inequality in compulsory education finance in China: 1998-2008

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

In recent decades, the inequality in compulsory education finance in China has remained a widespread and serious problem. Based on a provincial-level dataset in the period of 1998-2008, this study analyzed the disparities of school funding in China, attempting to explore the important factors that may have contributed to the inequality. Using the methods of factor decomposition and regression-based decomposition of Gini coefficient, it showed that the ine-quality of school funding had not been reduced after recent governmental reforms. The level of economic development appeared to be highly associated with the inequality of expenditures for compulsory education. The empirical results of this analysis suggest that a sound system of intergovernmental fiscal transfers with built-in equalization features may need to be devel-oped in China.

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