How does ethnic diversity shape the design of intergovernmental fiscal relations? Evidence from China
研究了中国各省民族多样性如何影响财政集权与均等化，发现民族多样性越高，省级财政越集权、均等化力度越大，且该效应在地方领导与中央关系紧密、地方俘获较轻的省份更强。
Abstract This study examines how ethnic diversity shapes the design of intergovernmental fiscal relations in regimes such as China, where local accountability and resident mobility are largely absent. We argue that in these regimes, ethnic diversity largely captures potential social conflicts and instability, consequently requiring a higher level of fiscal centralization and regional equalization from upper‐level governments to preserve social stability. Using provincial and sub‐provincial level panel data from China for 1995–2019, we find strong supporting evidence that an increase in a province's ethnic diversity significantly increases fiscal centralization and the provincial government's fiscal equalization efforts. We also show that these effects tend to be stronger in provinces whose leaders have closer ties with the central authority and where local capture is less serious. Our study contributes to a better understanding of ethnic diversity's consequences on the policy choices governments make.