The Effect of Ecological Fiscal Transfers on Child Mortality: Evidence From China

This paper studies how ecological fiscal transfers (EFT) can affect child health by exploiting a county-level panel dataset, using variation across counties and over time in the implementation of EFT policy in China. Our estimates indicate that EFT leads to a significant decline of 0.121 in the under-five mortality rates. Notably, EFT can increase three types of public expenditures, environmental protection, social security and healthcare, due to the flypaper effect. It results in reducing air pollution, increasing rural residents' income and improving the supply of health care service, and causes the decrease of mortality rates. The health effect of EFT is more significant in counties with steep slope, high fiscal pressure and weak clan culture.