Abstract:

The total amount of education funding and the distribution structure are two basic issues of government financial education expenditure. This paper estimates the optimal size and structure of the three levels of education, and further obtains a reasonable ratio of fiscal education expenditure to GDP. The study concludes that when the marginal return of education expenditure is 1, the optimal distribution structure of fiscal education funding in compulsory education, general high school, and general tertiary education is 49.7%, 14.4%, and 35.9% respectively. Combined with the marginal output condition and the prediction of the future GDP, the optimal proportion of fiscal education funding to GDP in China should be 4.29% by 2035. For this reason, it is necessary in future years to take into account economic growth conditions and fiscal capacity to steadily increase fiscal investment in education year by year and optimize its distribution structure.

Key words: three-level education, fiscal education funding, Barro’s law