Can Transfer Payment Reduce the Inequality of Compulsory Education in Poor Areas? An Empirical Study Based on the Data from 18 Counties in 6 Provinces in China

Transfer payment is of great significance for poverty alleviation and balanced regional development. Based on the first-hand survey data from 18 key counties of 6 provinces in China’s national poverty alleviation and development program, this paper uses propensity score matching to calculate the effects of transfer payment funds on the results of compulsory education in impoverished areas and uses Shapley value decomposition to decompose correlated factors. It finds that when the characteristics of students, families and schools controlled, transfer payment funds significantly lower student academic achievements in some subjects and aggravate the inequality of educational results, which may be the result of the reduction of local education funds caused by the “crowding out effect” of transfer payment. Suggestions are made in this paper to standardize the utilization of transfer payment funds, establish a linkage mechanism between the educational results of poor students and transfer payment funds, implement the assisting plan for teachers and students in poor areas, strengthen the “pertinent support for intelligence development”, and unite multiple agencies to increase input in education, with the purpose of reducing the inequality of compulsory education in poor areas.