The Impact of County-Level Government Fiscal Expenditure on Rural Common Prosperity

Common prosperity, as a core value pursuit of the socialist theoretical system with Chinese characteristics, profoundly reflects the essential attributes and distinctive features of Chinese modernization. Among these, effectively narrowing the urban-rural income gap is a critical pathway to achieving common prosperity. Scientific and rational fiscal expenditure policies, serving as an important tool for adjusting national income distribution and promoting social equity and justice, play an indispensable role in advancing common prosperity. Based on county-level panel data from China between 2000 and 2023, this study constructs a two-way fixed-effects econometric model to empirically analyze the impact of government fiscal expenditure on rural common prosperity. The findings indicate that government fiscal expenditure significantly enhances rural common prosperity, a conclusion supported by robustness tests including alternative econometric methods, lagged treatment, and winsorization. Heterogeneity analysis reveals that the fiscal expenditure elasticity in less-developed regions is significantly higher than in developed regions, and the fiscal expenditure coefficient in high-transfer regions is markedly greater than in low-transfer regions, aligning with the law of diminishing marginal utility and the Lewis dual-sector model. Mechanism analysis demonstrates that government fiscal expenditure boosts common prosperity by promoting capital deepening (i.e., stimulating fixed-asset investment) and by driving the primary and secondary industries, exhibiting partial mediating effects.