IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v69y2021ics1043951x21000912.html
   My bibliography  Save this article

Removing the “Hats of Poverty”: Effects of ending the national poverty county program on fiscal expenditures

Author

Listed:
  • Zhu, Jiong
  • Liu, Shouying
  • Li, Yihao

Abstract

This paper investigates the effect of the cancellation of China's program of “national poverty counties”—a place-based policy—on county-level fiscal expenditures. Our difference-in-differences results indicate that the cancellation reduces the county fiscal expenditure-to-GDP ratio by an average of 3.78%. To support a causal interpretation of these findings, we provide two plausible explanations, the reverse flypaper effect and the active/passive waste effect. Our findings survive the consideration of selection bias, omitted-variable bias, and spatial correlation. Policy implications of our findings are also discussed.

Suggested Citation

  • Zhu, Jiong & Liu, Shouying & Li, Yihao, 2021. "Removing the “Hats of Poverty”: Effects of ending the national poverty county program on fiscal expenditures," China Economic Review, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:chieco:v:69:y:2021:i:c:s1043951x21000912
    DOI: 10.1016/j.chieco.2021.101673
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X21000912
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2021.101673?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Louis Putterman & David N. Weil, 2010. "Post-1500 Population Flows and The Long-Run Determinants of Economic Growth and Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(4), pages 1627-1682.
    2. Oriana Bandiera & Andrea Prat & Tommaso Valletti, 2009. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," American Economic Review, American Economic Association, vol. 99(4), pages 1278-1308, September.
    3. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    4. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    5. Meng, Lingsheng, 2013. "Evaluating China's poverty alleviation program: A regression discontinuity approach," Journal of Public Economics, Elsevier, vol. 101(C), pages 1-11.
    6. Matias Busso & Jesse Gregory & Patrick Kline, 2013. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," American Economic Review, American Economic Association, vol. 103(2), pages 897-947, April.
    7. Gilles Duranton & Anthony J. Venables, 2018. "Place-Based Policies for Development," NBER Working Papers 24562, National Bureau of Economic Research, Inc.
    8. Emily Oster, 2019. "Unobservable Selection and Coefficient Stability: Theory and Evidence," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(2), pages 187-204, April.
    9. Robert P. Inman, 2008. "The Flypaper Effect," NBER Working Papers 14579, National Bureau of Economic Research, Inc.
    10. Yi Lu & Jin Wang & Lianming Zhu, 2019. "Place-Based Policies, Creation, and Agglomeration Economies: Evidence from China's Economic Zone Program," American Economic Journal: Economic Policy, American Economic Association, vol. 11(3), pages 325-360, August.
    11. Patrick Kline, 2010. "Place Based Policies, Heterogeneity, and Agglomeration," American Economic Review, American Economic Association, vol. 100(2), pages 383-387, May.
    12. Bo, Shiyu, 2020. "Centralization and regional development: Evidence from a political hierarchy reform to create cities in china," Journal of Urban Economics, Elsevier, vol. 115(C).
    13. Kelly, Morgan, 2019. "The Standard Errors of Persistence," CEPR Discussion Papers 13783, C.E.P.R. Discussion Papers.
    14. Li, Pei & Lu, Yi & Wang, Jin, 2016. "Does flattening government improve economic performance? Evidence from China," Journal of Development Economics, Elsevier, vol. 123(C), pages 18-37.
    15. Chang Liu & Guangrong Ma, 2019. "Are Place-Based Policies Always a Blessing? Evidence from China’s National Poor County Programme," Journal of Development Studies, Taylor & Francis Journals, vol. 55(7), pages 1603-1615, July.
    16. Morgan Kelly, 2019. "The Standard Errors of Persistence," Working Papers 201913, School of Economics, University College Dublin.
    17. Zhu, Jiong & Ang, James B. & Fredriksson, Per G., 2019. "The agricultural roots of Chinese innovation performance," European Economic Review, Elsevier, vol. 118(C), pages 126-147.
    18. Carrin, Guy & Ron, Aviva & Hui, Yang & Hong, Wang & Tuohong, Zhang & Licheng, Zhang & Shuo, Zhang & Yide, Ye & Jiaying, Chen & Qicheng, Jiang & Zhaoyang, Zhang & Jun, Yu & Xuesheng, Li, 1999. "The reform of the rural cooperative medical system in the People's Republic of China: interim experience in 14 pilot counties," Social Science & Medicine, Elsevier, vol. 48(7), pages 961-972, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wu, Maozhen & Zhang, Penglong, 2024. "Poverty alleviation and pollution reduction: Evidence from the poverty hat removal program in China," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 56-76.
    2. Lingling Zhou & Tao Shi & Qian Zhou, 2023. "Is ICT Development Conducive to Reducing the Vulnerability of Low-Carbon Energy? Evidence from OECD Countries," IJERPH, MDPI, vol. 20(3), pages 1-22, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Melissa Rubio-Ramos, 2022. "From Plantations to Prisons: The Race Gap in Incarceration After the Abolition of Slavery in the U.S," ECONtribute Discussion Papers Series 195, University of Bonn and University of Cologne, Germany.
    2. Raoul van Maarseveen, 2021. "The urban–rural education gap: do cities indeed make us smarter? [Educational investment responses to economic opportunity: evidence from Indian road construction]," Journal of Economic Geography, Oxford University Press, vol. 21(5), pages 683-714.
    3. Shiyi Chen & Wanlin Liu & Hong Song & Qing Zhang, 2024. "Government‐led e‐commerce expansion project and rural household income: Evidence and mechanisms," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 150-174, January.
    4. Duan, Wenqi & Jiang, Mingming & Qi, Jianhong, 2024. "Poverty or pollution: The environmental cost of E-commerce for poverty reduction in China," Journal of Environmental Economics and Management, Elsevier, vol. 127(C).
    5. Cemal Eren Arbatlı & Gunes Gokmen, 2023. "Human capital transfers and sub-national development: Armenian and Greek legacy in post-expulsion Turkey," Journal of Economic Growth, Springer, vol. 28(1), pages 1-43, March.
    6. Zheng, Xiaodong & Shangguan, Shuangyue & Fang, Zuyi & Fang, Xiangming, 2021. "Early-life exposure to parental mental distress and adulthood depression among middle-aged and elderly Chinese," Economics & Human Biology, Elsevier, vol. 41(C).
    7. Adjisse, Sossou Simplice, 2022. "The Legacy of the Transatlantic and Indian Ocean Slave Trades on Contemporary Intent to Migrate in Africa," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322512, Agricultural and Applied Economics Association.
    8. Lu, Hongyou & Liu, Min & Song, Wenjing, 2022. "Place-based policies, government intervention, and regional innovation: Evidence from China's Resource-Exhausted City program," Resources Policy, Elsevier, vol. 75(C).
    9. Stefan Bauernschuster & Michael Grimm & Cathy M. Hajo, 2023. "The Impact of Margaret Sanger’s Birth Control Clinics on Early 20th Century U.S. Fertility and Mortality," CESifo Working Paper Series 10421, CESifo.
    10. Cemal Eren Arbatlı & Quamrul H. Ashraf & Oded Galor & Marc Klemp, 2020. "Diversity and Conflict," Econometrica, Econometric Society, vol. 88(2), pages 727-797, March.
    11. Zhao, Chunkai & Chen, Boou & Song, Zhiyong, 2024. "School nutritious feeding and cognitive abilities of students in poverty: Evidence from the nutrition improvement program in China," Children and Youth Services Review, Elsevier, vol. 159(C).
    12. Guinnane, Timothy W., 2023. "We Do Not Know the Population of Every Country in the World for the Past Two Thousand Years," The Journal of Economic History, Cambridge University Press, vol. 83(3), pages 912-938, September.
    13. Gibbons, Stephen & Overman, Henry & Sarvimäki, Matti, 2021. "The local economic impacts of regeneration projects: Evidence from UK's single regeneration budget," Journal of Urban Economics, Elsevier, vol. 122(C).
    14. Andrea Cintolesi & Sauro Mocetti & Giacomo Roma, 2024. "Productivity and entry regulation: evidence from the universe of firms," Temi di discussione (Economic working papers) 1455, Bank of Italy, Economic Research and International Relations Area.
    15. Kitchens, Carl & Wallace, Cullen T., 2022. "The impact of place-based poverty relief: Evidence from the Federal Promise Zone Program," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    16. Jerch, Rhiannon & Kahn, Matthew E. & Lin, Gary C., 2023. "Local public finance dynamics and hurricane shocks," Journal of Urban Economics, Elsevier, vol. 134(C).
    17. Löffler, Max & Siegloch, Sebastian, 2015. "Property Taxation, Local Labor Markets and Rental Housing," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112967, Verein für Socialpolitik / German Economic Association.
    18. Fabian Siuda & Uwe Sunde, 2021. "Disease and demographic development: the legacy of the plague," Journal of Economic Growth, Springer, vol. 26(1), pages 1-30, March.
    19. Maseland, Robbert, 2021. "Contingent determinants," Journal of Development Economics, Elsevier, vol. 151(C).
    20. Ashley C. Bradford & Johanna Catherine Maclean, 2024. "Evictions and psychiatric treatment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 43(1), pages 87-125, January.

    More about this item

    Keywords

    China; Fiscal expenditure; National poverty county; Place-based policy; Poverty program;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:69:y:2021:i:c:s1043951x21000912. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.