Fiscal Decentralisation, the Knowledge Economy and School Teachers’ Wages in Urban China

Abstract

<p>We examine how fiscal decentralisation and progress towards the development of a knowledge-intensive economy has affected teachers’ wages in China, utilising panel data from 2001 to 2013. We find that fiscal decentralisation has a negative impact on teachers’ wages and that this effect is magnified through a deepening of the knowledge economy, while the knowledge economy itself has no effect on teachers’ wages. The findings suggest that incentives being offered to local administrators need to be revisited if China is convinced of the need to increase teacher quality in ways suited to the knowledge economy which it wishes to construct.</p