Decentralization and health resource allocation: Quasi-experimental evidence from China

This paper examines the causal impacts of decentralization of health resource allocation in China. We use the province-managing-county reform that expanded the administrative and fiscal powers of the counties as a quasi-natural experiment and exploit its staggered implementation across counties for identification. Combining a longitudinal county-level data from 2000 to 2012 with a generalized difference-in-difference design, we find that the introduction of the reform led to an increase in health resources at the county level. Moreover, the expansion of administrative power at the county level had a greater impact on health resources than fiscal power, while the simultaneous expansion of both powers had a more significant impact. Our results highlight the importance of designing deep and appropriate decentralization reforms to balance local health resources and promote health equity in China.