Fiscal Disparities and the Equalization Effects of Fiscal Transfers
at the County Level in China

Yin Heng

Using the fiscal datasets from 1993 to 2003 in China, this paper studies
fiscal disparities and the equalization effects of fiscal transfers at the county level. The results indicate that there are huge fiscal disparities across regions, and this kind of inequality takes on a lasting upward trend. The persistence of fiscal inequality is very high, and also trends upward. Moreover, transfers from upper governments exaggerate fiscal disparities at the county level. The earmarked subsidies and tax rebates are the most unequal fiscal transfer schemes. The factor transfers have some equalization effects when we take per capita fiscal ability calculated by fiscal-supported population into account, but neutralization effects disappear from the viewpoint of per-capita fiscal ability averaged by total population.

Key Words: Fiscal disparities; Fiscal transfers; Equalization effect; County-level jurisdictions.
JEL Classification Numbers: H77, O15.