Abstract: This paper aims to investigate the changes in urban-rural income gap and the determinants during the period of 1997-2010 in China and its three regions. After estimating the fixed-effects model of the urban-rural income differential equation, the empirical results show that, at the national level, the weakening of dual economic structure and urban-biased financial policy have narrowed the income gap between urban and rural residents, while the acceleration of urbanization and industrialization, deepening of opening-up and the urban-relaxed and rural-strict population policies have widened this income gap since 1997. Meanwhile, as the level of economic development varies from area to area in China, various factors have played different roles on this income gap in different areas in China. Policy to speed up urbanization progress has positive effects in narrowing this income disparity in Eastern and Central China, but in Western China the situation is on the contrary. Deepening of opening-up has widened this income gap in Eastern China，but this role is not significant in Western and Central China. Weakening of urban-biased financial policy is helpful for narrowing this income disparity in Western China, but it’s just the opposite in Eastern and Central China. In addition, the current education policy has played a significant positive role only in Western China. Hereby, some policy recommendations are proposed to narrow current urban-rural income gap.
Keywords: Dual Economic Structure, Government Policy, Urban-rural Income Gap, Three Regions in China
source:Finance & Trade Economics ,No4,2013