Study Of The Relationship Between Human Capital And The Urban-rural Income Gap

China's economy has developed rapidly since the open and reform policy. At the same time the income level of both urban and rural citizens keeps increasing, however, the gap of income distribution is widen, to such an extent that it brings about many social problems. To solve this problem, a number of specialists and schoolars have offered many precious explanations and suggestions from their different points of view, thus contributing a lot to the final solutions to the increasing income disparity. There are many factors that result in the problem, and this paper studies, the influence of the human capital gap between urban and rural citizens on the widening of income disparity.The first part is an introduction which includes the background, the purpose, the contents of paper and the present research developed both in China and abroad. The second part first discusses, theoretically and statistically, the index of urban human capital and income disparity, and then analyzes on the present situation of income disparity in both urban and rural, and the disparity of urban human capital. The third part of the thesis selects the time sequential satistics of disparities from 1981 to 2004 in income and expense on food and education between urban and rural residents for positive analysis.This part analyzes the relation between human resources and disparity in income with substantial evidence. Basing on testing the stability of the time sequential variables, this part makes a co-integration analysis of the relation among the three time series variables , and sets up a model of vector analysis regression, with a pulse responding function and a resolution of variance to make a dynamic analysis of relation among these three variables, and to reveal clearly the degree of influence of disparities of income and expense in food and education on income disparity between urban and rural citizens. Finally the fourth part offers, on the basis of the result above, some suggestions that might help solve the problems of human capital gap between urban and rural areas.