Abstract:

The effective provision of public goods remains a challenge for most developing countries. However, the People's Republic of China has managed to achieve relatively effective public goods provision with extremely limited resources. This paper focuses on the impact of clans on rural education supply, investigating the role of informal institutions under changing institutional environments. Using census data, the study employs a difference–in–differences model constructed based on the impact of the fiscal decentralization reform and birth cohorts. The study finds that when government provision of public goods is insufficient, local clans can enhance public goods supply through channels such as promoting the development of township enterprises, thereby extending the years of schooling for the local rural population. However, as the government expands its investment in rural education, the influence of clans becomes insignificant. The findings suggest that informal institutions can serve as a supplement when formal institutions are inadequate, though the effects are time-bound and conditional.

Key words:

public goods, institutional change, clans, rural education