Abstract: Common prosperity is a significant characteristic of Chinese-style modernization and an essential requirement of socialism with Chinese characteristics. The allocation of fiscal expenditure between 'productive' and 'livelihood-oriented' spending significantly influences the degree of common prosperity. Existing studies primarily focus on the impact of individual types of fiscal expenditure on economic growth or income inequality, with limited research integrating productive expenditure, livelihood-oriented expenditure, and common prosperity into a unified analytical framework. Based on provincial panel data from 2000 to 2022, this study employs theoretical analysis, a fixed-effects model, a threshold effects model and a chain mediation model to explore the relationship between fiscal expenditure structure and common prosperity. The findings reveal that increasing the proportion of livelihood-oriented fiscal expenditure is more conducive to promoting common prosperity, a conclusion that remains robust across a series of sensitivity tests. The impact of fiscal expenditure structure on common prosperity exhibits heterogeneity across factors such as geographical location, fiscal self-sufficiency, and fiscal transparency.Further analysis shows that the effect of increasing the proportion of livelihood-oriented fiscal expenditure on common prosperity displays a nonlinear marginal increment. The optimal proportion of livelihood-oriented expenditure at the current stage is estimated to be approximately 64.04%. Mechanism tests indicate that raising the proportion of livelihood-oriented fiscal expenditure significantly enhances labor productivity and enterprise performance, thereby advancing common prosperity. These findings provide empirical evidence and policy recommendations for optimizing fiscal expenditure structures and advancing common prosperity.

Key words: fiscal expenditure structure, common prosperity, optimal proportion, chain mediation effect