The Empirical Study On The Urban-Rural Income Gap Based On The Human Capital Perspective

In recent years, with the deepening reform in China system, especially in the field of the income distribution, the living standards of both urban and rural residents have been greatly improved, nevertheless, the income gap has been continually widened, among those, the income gap between the urban and rural residents is the most obvious,and have already influence our society stabality and economic growth. There are so many factors, in which human capital as one of the influential factors in increasing people's income and narrowing the income gap, to a certain extent, can unleash people's productive capacity and boost efficiency. Therefore, on the basis of the objective situation and formative reasons of the income gap between urban-rural residents in Zhejiang, it seems actually and theoretically significant to study the income gap in urban-rural residents and put forward some policy proposals to narrow its income gap from the perspective of human capital.Based on human capital perspective, this paper has studied on the problem of income gap between rural and urban residents in Zhejiang province. After elaborating the research background, significance and review of interrelated topics both domestic and abroad, the thesis deeply studied the specific performance of human capital difference between urban and rural areas in Zhejiang provience, the situation and formative factors of the income gap between urban-rural in Zhejiang province, the influence which human capital affected the income gap between urban and rural areas, finally, some suggestions for reducing the income gap were put forward.This paper can be divided into six chapters, the first chapter is the Introduction, fitst of all, it has discussed the actual and theoretical significance of this paper on the basis of the introduction to the background; then it has summarized the current research state of the interrelated problems, and provided a basis for this paper through the literature review; once again it is the ideas,possible innovations,research difficulties and methods. The second chapter is the theoretical summarization of human capital and the income gap between urban-rural areas, it has mainly discussed the fundamental meaning of human capital and its original theory,the concept and measurement of the income gap between urban-rural residents,the relationship between human capital and the income gap in urban-rural areas. The third chapter is the analysis of the income gap between urban-rural residents in Zhejiang, it has discussed the income composition and income function of the urban-rural residents, besides it also has analyzed the status quo of the income gap between urban and rural residents. The fouth charpter is the analysis of differences in human capital between urban-rural areas in Zhejiang, it has analyzed the present conditions of human capital in Zhejiang, meanwhile, it still focused on the differences in human capital between urban-rural areas in Zhejiang from the quality,the accumulative ability and the structure. The fifth chapter is the analysis of the effect that human capital upon the income gap between urban-rural residents, it has elaborated on the formation mechanism of the income gap in urban-rural residents, and build the mathematical model to make empirical analysis of the influence human capital acted upon the income gap between urban-rural residents. The sixth chapter is the suggestions for decreasing the income gap in urban-rural residents, it has mainly put forward some corresponding suggestions on the basis of empirical test, in the end gives the conclusion and the prospect.There are two innovations in this paper:1.In this paper, by selecting the ratio of per capita years on education between urban-rural residents,the gap of per capita expenditure on education and health care between urban-rural residents as the human capital index , we established the model of income gap in urban-rural residents to analyze the relationship between human capital and the income gap. At the same time, we also bulid the income functions of urban and rural residents to analyze the impacts of human capital on the income, thus it can make the research more specific and offer the quantitative basis to grasp the currenr situation and influential factors of the income and income gap between urban-rural residents in Zhejiang.2.For the low level of human capital in Zhejiang especially in rural areas, this paper put forward some suggestions of optimizing human capital level in rural areas and narrowing the income gap between urban-rural residents ,which can be used for reference.The main findings of the study are that:1 .The income gap between urban and rural residents in Zhejiang has appeared the trend of dynamic widening from the 1990s. No matter we employ the gini coefficient or the income ratio of the urban-rural, the income gap of Zhejiang is continually widening. Among that, the interior income gap in the rural areas is more serious than that in the urban area.2.The income gap in Zhejiang is far below the average level of the whole country, however, it is not low when compared with the like areas in our own country such as Shanghai,Jiangsu. The number of cities that the income ratio is above the average(2.49) in Zhejiang has also reached 5 in 2005, Lishui city even reached 3.61. Obviously, the income gap between the urban-rural areas seems apparent in Zhejiang nowadays.3. The income between urban and rural residents has been greatedly improved in Zhejiang since the 1980s, however, the stock and level of human capital are relatively low, and the differences in human capital are also remarkable. On the whole, in Zhejiang, the quality of human capital is generally low,as well as the stock of human capital and the proportion of professionals; In the area of education and health care, investment of human capital in rural aeras is far behind cities, which to a certain extent lead to the rural areas under-investment in human capital and made the income gap between urban and rural areas obviously.4. According to the theory of the relation between human capital and income, the more the accumulation of human capital is, the more the income is, that is, human capital is in direct proportion to income. The thesis also supports the theory through empirical analysis, which shows that human capital can affect the income of rural and urban residents5.It is not be denied that human capital difference between urban and rural areas is one of the influential factors in narrowing the income gap between urban and rural areas, however, it doesn't mean that we can ignore other influential factors. The empirical research showed that the gap of human capital, such as the years of receiving education in each urban and rural residents,the educational investments and medical investmens in the urban-rural areas, would widen the income gap in the urban-rural areas. Simultaneously, it also indicated that the gap in the number of the employee between urban-rural areas and the added value of township enterprises have an significant influence on the income gap between urban-rural residents. Therefore, it is necessary to adopt some effective measures on basis of institution and policies in view of narrowing the income gap between urban and rural residents.