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ABSTRACT
Since the outbreak of COVID-19, public health has become a hot topic at home and abroad. This paper provides an empirical analysis aimed at clarifying the role played by vertical fiscal imbalance (VFI) in public health. Utilising China’s provincial panel data from 2002 to 2018, this study finds strong regularities in the effects of VFI. Specifically, VFI is harmful to public health. It also negatively affects public health by inhibiting public health expenditure and aggravating air pollution. In terms of policy implications, governments may improve public health by reasonably controlling VFI between central and local governments.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1. With respect to expenditure assignment, the central government is responsible for national defence, capital construction, research and development, universities and research institutes, industrial policy, and administration of national institutions. Local governments are responsible for providing public administration and social services such as primary and secondary education, public safety, health care, social security, and other local services. Hence, local governments bear the main responsibility for the development of local public health.
2. Variance inflation factor (VIF) results show that the data used in this study do not suffer from a high degree of multicollinearity because the maximum VIF is 5.20 (less than 10).
3. The design of this VFI indicator not only reflects the degree of mismatch between fiscal expenditure decentralisation and fiscal revenue decentralisation, but also incorporates the element of the gap between revenue and expenditure, which is more in line with the practice of Chinese-style fiscal decentralisation reform.