Research On China's Urban-Rural Income Disparity Based On Public Expenditures

It is a fact that there is income disparity between city and countryside in China and it is impossible to solve this problem solely by market power. Under this situation, government intervention is indispensable to redistribute income. Public expenditures come along with many government policies. In this article, we will focus on the effects that different public expenditures, which base on consideration of people's livelihood and mainly be used to ease income disparity, have on Urban-Rural income disparity. The main differences between this article and prior researches are as followings: we will analyze the cause of Urban-Rural income disparity from public expenditures angle. Meanwhile, we will try to work on how the chosen public expenditures affect Urban-Rural income disparity more thoroughly. Moreover, since different researches in this field usually get different conclusions, in this paper, we will try to use ADF-test, Johansen co-integration test and co-integration regression analysis to work on the effects that the social security expenditure and education expenditure have on Urban-Rural income disparity. At the same time, we will study the principle of it according to the real situation in China and try to bring forward polices relating to public expenditures on narrowing Urban-Rural income disparity.The article begins with the current situation of Urban-Rural income disparity in China. Then, we choose three representational expenditures, that is, fiscal expenditure on agriculture, the social security expenditure and education expenditure. In the second part, we try to analyze its effects on Urban-Rural income disparity. We try to give a thorough explanation on how expenditures that mainly benefit peasants narrow Urban-Rural income disparity while expenditures that benefit both citizen and peasants widen it. We even use ADF-test, Johansen co-integration test and co-integration regression analysis to work on the effects that the latter two expenditures have on Urban-Rural income disparity. In the final part, we put forward many policy recommendations, which aim at easing conflicts about Urban-Rural income disparity by redistributing public expenditures and improving the efficiency of them. We point out the research limitation in the end.