Shirkers or Toilers? Local strategic action and education policy under fiscal abundance

Making sense of the behavior of local government officials is important for understanding the operation of large multi-tiered governance systems such as China. Local officials have often been seen as self-serving maximizers of the ‘local interest’, adopting the best possible strategies of action allowed by the circumstance of the time. A prevailing view in the literature, influenced by frames of analysis provided by principal-agent theory, is that local officials are shirkers and rent-seekers. In fiscal policy, where resources have normally been tight, this means local hoarding of resources, shirking of spending responsibilities and assertive bidding for central projects, resulting in inefficiencies in resource allocation. Recently a substantial inflow of central funding into local education offers an opportunity to reassess this characterization of local strategic behavior. How have local leaders responded at a time of relative fiscal abundance? Did they seek to increase ever more funding inflow and reduce local responsibility? Examining aggregate statistics at the national level and local case materials from the central part of the Chinese hinterland, this article finds that available evidence does lend some support to previous observations of local fiscal behavior, such as diverting funds. However, other expenditure patterns in the presence of relative abundance of central funds present strong evidence that this behavior masks a deeper motivation to act responsibly in the pursuit of shared education reform goals.