Intergovernmental Assignment of Expenditure Responsibilities and the High-Quality, Balanced Development of Compulsory Education

Optimizing the intergovernmental assignment of expenditure responsibilities is crucial for improving the efficiency of investment in people. Focusing on the high-quality, balanced development of compulsory education and drawing on the 2016 reform of the funding guarantee mechanism for urban and rural compulsory education, this article empirically examines the impact of differences in expenditure responsibilities among grassroots governments on students' academic performance. The results show that students' academic performance declined in jurisdictions where county-level governments bore greater expenditure responsibilities. Mechanism analysis indicates that county-level governments assuming greater expenditure responsibilities faced more severe fiscal pressure after the reform; their education expenditure and educational facilities failed to increase in a timely manner, while students within their jurisdictions experienced longer commuting times and exhibited relatively lower levels of study effort. Heterogeneity analysis shows that this effect was concentrated primarily in central and western regions, at the primary-school stage, and among students attending rural schools. Further analysis indicates that declines in students' academic performance subsequently affected households' consumption–saving decisions. By calculating a disparity index for per-student education expenditure in the nationwide general public budget, the article finds that the reform of the compulsory education funding guarantee mechanism played an important role in promoting the balanced development of compulsory education. These findings provide theoretical and empirical guidance for deepening reforms to the assignment of fiscal powers and expenditure responsibilities and for the strategic planning of investment in people.