How does China's local fiscal decentralization promote common prosperity? An analysis of the mediating role of rural revitalization

Drawing on the incentive perspective of Second-Generation Fiscal Federalism (SGFF), this study utilizes provincial panel data from China (2010–2021) to multidimensionally measure the levels of rural revitalization and common prosperity, constructing a unified analytical framework to examine the relationships among fiscal decentralization, rural revitalization, and common prosperity. Through mediation analysis, rigorous endogeneity treatment, and multiple robustness checks, the study yields three key findings. First, under the strategic orientation and incentive structure of this period, fiscal decentralization is conducive to the development of common prosperity. Second, rural revitalization serves as a significant partial mediator. Notably, this transmission pathway is predominantly driven by the "Prosperity" dimension, characterized by infrastructure and livelihood inputs. Third, the promotional effects exhibit regional heterogeneity; leveraging superior fiscal endowments, the effects of fiscal decentralization in eastern regions are significantly stronger than in central and western regions. Based on these conclusions, policy recommendations are proposed to deepen fiscal decentralization reform, continue to optimize and implement the rural revitalization strategy, and promote balanced regional development.