Poverty alleviation and rural revitalization: Perspective of fiscal spending and data evidence from 81 Chinese counties

Abstract

This paper builds a theoretical model of government performance functions for poverty alleviation using county-level panel data from 81 counties in China from 2014 to 2019. It uses a Panel-Tobit model and mechanism tests to verify the effect of fiscal policies on poverty reduction, and consolidates the robustness of the results through a series of extended methods, such as endogeneity treatment, robustness tests, and heterogeneity analysis. The results show that (1) poverty-related allocations can significantly reduce poverty incidence, and the effect of poverty reduction is more pronounced in poor counties; (2) public spending can significantly reduce poverty incidence, and the effect of poverty reduction through public spending is more pronounced in the sample of poor counties and nonfunded pilot counties; (3) poverty reduction can affect poverty incidence through primary and secondary industry development, and the effect of poverty reduction through primary industry development is more significant, while public spending does not affect poverty incidence through primary and secondary industries; and (4) improving health services can reduce poverty to a large extent, while education development has no effect on poverty reduction due to the long return cycle. This study suggests increasing the size of poverty-specific allocations and public spending, strengthening industry support, and implementing differentiated policy initiatives according to local conditions to improve the impact of poverty reduction.