A Preliminary Analysis of Financial Neutrality in Compulsory Education: Based on Data from 121 Counties in Guangdong Province

This paper examines the differences in the compulsory education funding per capita of the 121 counties in Guangdong Province during 2015-2017. The findings reveal huge differences with a rising gap. Using the panel data to test the financial neutrality of county-level compulsory education, this paper identifies that the differences in county-level economic development significantly affect the difference in the per-county compulsory education costs, particularly in the junior secondary education stage. In order to improve the financial neutrality of compulsory education in Guangdong Province and to narrow the inter-county gaps, the government should take the following reforms: improving the provincial-level fundraising mechanisms to enhance the amount of financial transfer payments to 18 counties in western Guangdong; second, reinforcing the provincial-level compulsory education financial incentive measures, so as to promote the county-level government’s financial support to increase its investment on compulsory education.