The Impact of Government Transfer Payments on Extracurricular Tuition Expenditure for Children in Urban China

Abstract:This article uses 2012–18 China Family Panel Survey (CFPS) panel data to study the impact of government transfer payment receipt on extracurricular tuition expenditure for children of urban families requiring aid. Findings have shown that government transfer payments increase extracurricular tuition spending for children and have a positive impact on total family expenditure with regard to children's education. Heterogeneity tests indicate that the impact is significant in the central and eastern regions of China, among children above seven years old and children in one-child families. The authors attribute the positive effects to parents' increased awareness of the importance of education and to increased opportunities for children from assisted families to participate in extracurricular tuition classes. This article proposes policy recommendations to improve the government transfer payment system in urban China.