The Korea Local Administration Review

This study is to investigate factors, which could affect the level of socialsecurity spending, by establishing panel data collected from 31 Chinese localgovernments (castle, city and autonomous district)from 2007 to 2011, and byassuming fixed effects model and random effects model respectively.As a result, it was found that factors such as urbanization level, unemploymentratio, Proportion of previous year expenditures, per person and tax burden ratiotends to have statistically positive impacts on social security spending.Meanwhile, GRDP representing the income level per person shows statisticallynegative impacts on social security spending.It is because Chinese socialsecurity system is heavily concentrated on labor in urban area, making socialsecurity spending irrelevant to income’s rising. Therefore, with enhanced socialsecurity system, Chinese governmentrequires to extent the object of socialsecurity from urban to rural area in order to increase social security spending.Furthermore, the government has to step up its effort for developing socialsecurity program aiming to rural people.
□ Keywords: fixed effects model, random effects model, urbanization, unemployment,tax burden ratio