Determinants of Government Size: Evidence from China

16 Pages Posted: 30 Nov 2010

See all articles by Alfred M. Wu

Alfred M. Wu

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy

Mi Lin

Lincoln International Business School, University of Lincoln, UK

Date Written: November 4, 2010

Abstract

This paper investigates the determinants of government size at the provincial level in China. We employ the panel data model as a platform for empirical analysis and control for endogeneity in the study. Our study shows that openness to trade and foreign direct investment (FDI) may curtail government expansion, and that the provincial-level public sector is characterized by economies of scale. This study also documents that Wagner’s law does not hold true for China. Moreover, both expenditure decentralization and revenue decentralization contribute to the expansion of China’s government.

Keywords: Government size, Wagner’s law, Scale effects, Openness to trade, Fiscal decentralization

JEL Classification: H11, H61

Suggested Citation

Wu, Alfred M. and Lin, Mi, Determinants of Government Size: Evidence from China (November 4, 2010). Public Choice, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1716683

Alfred M. Wu (Contact Author)

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy ( email )

Singapore
Singapore

Mi Lin

Lincoln International Business School, University of Lincoln, UK ( email )

Lincoln, LN6 7TS
United Kingdom

HOME PAGE: http://staff.lincoln.ac.uk/mlin

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