ZHANG Xuan, YANG Canming:Corruption and Income Disparity Between Urban and Rural Areas: Evidence From 120 Cities in China

Abstract：The rapid development of China's economy improves the living standard of urban and rural areas with the reform and opening up, but income disparity between them is aggravated.The government issued many preferential policies for rural residents, however, the effect is not significant.This research attempts to analyze the causes of income gap between urban and rural areas in China from perspective of the corruption.We choose China's 120 cities whose companies were surveyed by Word Bank(2006) and use the panel data including those 120 cities during the period of 2006-2008.The results of analysis of the fixed effect model demonstrate that China's corruption obviously aggravates the income disparity between urban and rural areas.This phenomenon exists in the areas of not only the east but also the center and west.Furthermore, we find that the effect of corruption on aggravating the income disparity in the east is stronger than that in the center and west.Besides, the analysis shows that promoting opening up can improve this income disparity in the east, and raising the level of urbanization can narrow the gap in the center and west.

Key words： Corruption    Income Disparity    Dual Economy

source:Finance & Trade Economics ,No.1,2015