IDEAS home Printed from https://ideas.repec.org/a/eee/soceps/v89y2023ics0038012123002124.html
   My bibliography  Save this article

Incentives for local government expenditures on people’s livelihood: the role of high-speed rail

Author

Listed:
  • Meng, Xia
  • Ding, Tao
  • Wang, Haisen

Abstract

Can high-speed rail (HSR) lines create effective incentives for local governments to supply public goods for people's livelihood? This paper builds a time-varying difference-in-differences (TVDID) model and uses 2002–2018 Chinese data. The empirical results show that HSR enhances the fiscal responsiveness of local governments and creates effective incentives for local governments' expenditures on education and medical/health care; however, this “HSR effect” does not significantly influence expenditures on social security or employment. The mechanism analysis shows that HSR has a significant amplification effect on interregional competition, specifically in terms of market access and human capital agglomeration. Notably, the opening of HSR lines forms a new “incentive-constraint” mechanism for local governments to supply public services for people's livelihood from both the supply and demand sides, and the fiscal and administrative capacities of local governments can strengthen the influence of HSR lines on the supply of public goods for people's livelihood.

Suggested Citation

  • Meng, Xia & Ding, Tao & Wang, Haisen, 2023. "Incentives for local government expenditures on people’s livelihood: the role of high-speed rail," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:soceps:v:89:y:2023:i:c:s0038012123002124
    DOI: 10.1016/j.seps.2023.101700
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0038012123002124
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.seps.2023.101700?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. Yang, Xuehui & Zhang, Huirong & Li, Yan, 2022. "High-speed railway, factor flow and enterprise innovation efficiency: An empirical analysis on micro data," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).
    2. Dave Donaldson, 2018. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," American Economic Review, American Economic Association, vol. 108(4-5), pages 899-934, April.
    3. Brueckner, Jan K., 2009. "Partial fiscal decentralization," Regional Science and Urban Economics, Elsevier, vol. 39(1), pages 23-32, January.
    4. Qian, Yingyi & Roland, Gerard, 1998. "Federalism and the Soft Budget Constraint," American Economic Review, American Economic Association, vol. 88(5), pages 1143-1162, December.
    5. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
    6. Dave Donaldson & Richard Hornbeck, 2016. "Railroads and American Economic Growth: A "Market Access" Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 799-858.
    7. Pao, Hsiao-Tien & Fu, Hsin-Chia, 2015. "Competition and stability analyses among emissions, energy, and economy: Application for Mexico," Energy, Elsevier, vol. 82(C), pages 98-107.
    8. Fan, Xiaomin & Xu, Yingzhi, 2023. "Does high-speed railway promote urban innovation? Evidence from China," Socio-Economic Planning Sciences, Elsevier, vol. 86(C).
    9. Rebecca Diamond, 2016. "The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000," American Economic Review, American Economic Association, vol. 106(3), pages 479-524, March.
    10. Salinas, Paula & Solé-Ollé, Albert, 2018. "Partial fiscal decentralization reforms and educational outcomes: A difference-in-differences analysis for Spain," Journal of Urban Economics, Elsevier, vol. 107(C), pages 31-46.
    11. Tim Loughran, 2008. "The Impact of Firm Location on Equity Issuance," Financial Management, Financial Management Association International, vol. 37(1), pages 1-21, March.
    12. Matthew Fuhrmann, 2020. "When Do Leaders Free‐Ride? Business Experience and Contributions to Collective Defense," American Journal of Political Science, John Wiley & Sons, vol. 64(2), pages 416-431, April.
    13. Benjamin Faber, 2014. "Trade Integration, Market Size, and Industrialization: Evidence from China's National Trunk Highway System," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(3), pages 1046-1070.
    14. Bellofatto, Antonio Andrés & Besfamille, Martín, 2018. "Regional state capacity and the optimal degree of fiscal decentralization," Journal of Public Economics, Elsevier, vol. 159(C), pages 225-243.
    15. Gilles Duranton & Diego Puga, 2020. "The Economics of Urban Density," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 3-26, Summer.
    16. Keen, Michael & Marchand, Maurice, 1997. "Fiscal competition and the pattern of public spending," Journal of Public Economics, Elsevier, vol. 66(1), pages 33-53, October.
    17. Pranab Bardhan & Dilip Mookherjee, 2006. "Decentralisation and Accountability in Infrastructure Delivery in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(508), pages 101-127, January.
    18. Shao, Shuai & Tian, Zhihua & Yang, Lili, 2017. "High speed rail and urban service industry agglomeration: Evidence from China's Yangtze River Delta region," Journal of Transport Geography, Elsevier, vol. 64(C), pages 174-183.
    19. Norman V. Loayza & Jamele Rigolini & Oscar Calvo-González, 2014. "More Than You Can Handle: Decentralization and Spending Ability of Peruvian Municipalities," Economics and Politics, Wiley Blackwell, vol. 26(1), pages 56-78, March.
    20. George R. Zodrow & Peter Mieszkowski, 2019. "Pigou, Tiebout, Property Taxation, and the Underprovision of Local Public Goods," World Scientific Book Chapters, in: George R Zodrow (ed.), TAXATION IN THEORY AND PRACTICE Selected Essays of George R. Zodrow, chapter 17, pages 525-542, World Scientific Publishing Co. Pte. Ltd..
    21. Liang, Wenquan & Lu, Ming, 2019. "Growth led by human capital in big cities: Exploring complementarities and spatial agglomeration of the workforce with various skills," China Economic Review, Elsevier, vol. 57(C).
    22. Huang, Yuxia & Jiang, Chenxin & Wang, Kun & Xiao, Yibin & Zhang, Anming, 2021. "Public-private partnership in high-speed rail financing: Case of uncertain regional economic spillovers in China," Transport Policy, Elsevier, vol. 106(C), pages 64-75.
    23. Nakagawa, Dai & Hatoko, Masatoshi, 2007. "Reevaluation of Japanese high-speed rail construction: Recent situation of the north corridor Shinkansen and its way to completion," Transport Policy, Elsevier, vol. 14(2), pages 150-164, March.
    24. Wioletta Dziuda & A. Arda Gitmez & Mehdi Shadmehr, 2021. "The Difficulty of Easy Projects," American Economic Review: Insights, American Economic Association, vol. 3(3), pages 285-302, September.
    25. Chang, Zheng & Diao, Mi & Jing, Kecen & Li, Weifeng, 2021. "High-speed rail and industrial movement: Evidence from China's Greater Bay Area," Transport Policy, Elsevier, vol. 112(C), pages 22-31.
    26. Gintarė Morkutė & Sierdjan Koster, 2018. "Human capital as a location factor: An empirical investigation of relocating firms and their labour force in the Netherlands," Papers in Regional Science, Wiley Blackwell, vol. 97(3), pages 595-616, August.
    27. Marzieh Ronaghi & Michael Reed & Sayed Saghaian, 2020. "The impact of economic factors and governance on greenhouse gas emission," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(2), pages 153-172, April.
    28. Shao, Zeng-Zhen & Ma, Zu-Jun & Sheu, Jiuh-Biing & Gao, H. Oliver, 2018. "Evaluation of large-scale transnational high-speed railway construction priority in the belt and road region," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 117(C), pages 40-57.
    29. Ren, Xiaohong & Chen, Zhenhua & Wang, Fang & Dan, Ting & Wang, Wei & Guo, Xiaotong & Liu, Chunhua, 2020. "Impact of high-speed rail on social equity in China: Evidence from a mode choice survey," Transportation Research Part A: Policy and Practice, Elsevier, vol. 138(C), pages 422-441.
    30. Timothy J. Goodspeed, 2020. "Decentralization and intra-country transfers in the Great Recession: the case of the European Union," Regional Studies, Taylor & Francis Journals, vol. 54(7), pages 931-941, July.
    31. Hickey, Rónán & Lozej, Matija & Smyth, Diarmaid, 2020. "Financing government investment and its implications for public capital: A small open economy perspective," Economic Modelling, Elsevier, vol. 93(C), pages 620-641.
    Full references (including those not matched with items on IDEAS)

    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. Bellofatto, Antonio Andrés & Besfamille, Martín, 2018. "Regional state capacity and the optimal degree of fiscal decentralization," Journal of Public Economics, Elsevier, vol. 159(C), pages 225-243.
    2. Shujie Yao & Jing Fang & Hongbo He, 2020. "Can Time–Space Compression Promote Urban Economic Growth? Evidence from China's High‐speed Rail Projects," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(5), pages 90-117, September.
    3. He, Guojun & Xie, Yang & Zhang, Bing, 2020. "Expressways, GDP, and the environment: The case of China," Journal of Development Economics, Elsevier, vol. 145(C).
    4. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    5. Egger, Peter H. & Loumeau, Gabriel & Loumeau, Nicole, 2023. "China's dazzling transport-infrastructure growth: Measurement and effects," Journal of International Economics, Elsevier, vol. 142(C).
    6. Chang, Zheng & Zheng, Longfei, 2022. "High-speed rail and the spatial pattern of new firm births: Evidence from China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 155(C), pages 373-386.
    7. Yafei Xu & Guoli Ou, 2022. "Does High-Speed Railway Promote the Level of Human Capital? An Empirical Analysis Based on Three Urban Agglomerations in China," Sustainability, MDPI, vol. 14(19), pages 1-17, October.
    8. Stephan Heblich & Stephen J Redding & Daniel M Sturm, 2020. "The Making of the Modern Metropolis: Evidence from London," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 2059-2133.
    9. Pablo D. Fajgelbaum & Edouard Schaal, 2020. "Optimal Transport Networks in Spatial Equilibrium," Econometrica, Econometric Society, vol. 88(4), pages 1411-1452, July.
    10. Das, Abhiman & Ghani, Ejaz & Grover, Arti & Kerr, William & Nanda, Ramana, 2024. "JUE insight: Infrastructure and Finance: Evidence from India’s GQ highway network," Journal of Urban Economics, Elsevier, vol. 142(C).
    11. Stephan Maurer & Ferdinand Rauch, 2023. "Economic geography aspects of the Panama Canal," Oxford Economic Papers, Oxford University Press, vol. 75(1), pages 142-162.
    12. Bird, Julia & Straub, Stéphane, 2020. "The Brasília experiment: The heterogeneous impact of road access on spatial development in Brazil," World Development, Elsevier, vol. 127(C).
    13. Yang, Xiaolan & Wang, Rui & Guo, Dongmei & Sun, Weizeng, 2020. "The reconfiguration effect of China's high-speed railway on intercity connection ——A study based on media attention index," Transport Policy, Elsevier, vol. 95(C), pages 47-56.
    14. Yoshifumi Konishi & Akari Ono, 2024. "Do Winners Win More from Transport Megaprojects? Evidence from the Great Seto Bridge in Japan," Keio-IES Discussion Paper Series 2024-018, Institute for Economics Studies, Keio University.
    15. Xu, Yang & Yang, Xi, 2021. "Access to ports and the welfare gains from domestic transportation infrastructure," Journal of Urban Economics, Elsevier, vol. 126(C).
    16. Camilo Acosta & Luis Baldomero-Quintana, 2024. "Quality of communications infrastructure, local structural transformation, and inequality," Journal of Economic Geography, Oxford University Press, vol. 24(1), pages 117-144.
    17. Dong, Xiaofang, 2018. "High-speed railway and urban sectoral employment in China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 603-621.
    18. Xiaoli Hu & Jieping Chen & Shanlang Lin, 2023. "Influence from highways’ development on green technological innovation: the case of Yangtze River economic belt in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11095-11120, October.
    19. Jia, Junxue & Liu, Yongzheng & Martinez-Vazquez, Jorge & Zhang, Kewei, 2021. "Vertical fiscal imbalance and local fiscal indiscipline: Empirical evidence from China," European Journal of Political Economy, Elsevier, vol. 68(C).
    20. Baum-Snow, Nathaniel & Henderson, J. Vernon & Turner, Matthew A. & Zhang, Qinghua & Brandt, Loren, 2020. "Does investment in national highways help or hurt hinterland city growth?," Journal of Urban Economics, Elsevier, vol. 115(C).

    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:soceps:v:89:y:2023:i:c:s0038012123002124. 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/seps .

    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.