The Effect Of Public Goods Supply On Urban-rural Income Gap

30years of reform and opening up, china has attract worldwide attention, not onlyachieved high-speed growth of economy as a miracle, but also realized the economicchanges from the traditional planned economic system to market economic system. Butduring the rapid economic development, there are also some structural problems worthattention.Firstly, it is the widening income gap between urban and rural areas, the nominalurban-rural income gap ratio extended from1.82by year1983to3.31times by year2008. It does not take the invisible income acquired by urban residents into account, ifcoupled with the invisible income; the real urban-rural income gap will be bigger.Secondly, the problem is the dual public goods supply system in urban and ruralareas, the same kind of public goods can enjoy free or cheap by urban residents, whileburdened by rural residents. The public goods enjoyed by rural residents are far belowthat of the city residents, there is a huge gap between urban and rural residents. The dualurban and rural public goods supply system and the expanding urban-rural income gap,not only continued to strengthen “dual” economic system, is not conducive to ruraldevelopment, but also not conducive to the realization of the affluent society. From along term, if the rural economy didn’t develop well, it is not good for the coordinate andsustainable of economic development.Under the background of the “dual” urban-rural public goods supply system andthe expanding urban-rural income gap, the author research the effects of publiceducation and social security on urban rural income gap. The paper study the dualpublic education and social security which should play the role of “redistribution”played the role of reducing and adjusting the income gap between urban and rural areas,or did not play a role in regulating income, but the result was reversed?Firstly, through a literature review of the current domestic and internationalresearch status about the urban-rural income gap, we found there were abundantresearches for the urban-rural income gap. But few scholars study the urban-ruralincome gap from perspective of the public goods, and their research is based on theangle of welfare economics. So they ignored the effect of the education and socialsecurity public goods on human capital. Therefore they discussed the effect of the“dual” public education and social security on urban-rural income but omitted the angle of the accumulation of human capital.This paper on the bases of Lucas and Romer’s “new growth theory”, studied theeffect of public goods on urban-rural income gap taking knowledge and human capitalinto consideration. Firstly, we analyzed the situation of “dual” urban-rural publiceducation and social security supply system. Secondly, we constructed a overlappinggenerations model, studied the mechanism of public education and social security onincome from theoretically. This study found that: public education affected oninvestment in education, social security affected on effective family time, both of themcommon influenced income through human capital accumulation. Thirdly, this paperresearched the relationship of public education and social security with incomedistribution through the numerical simulation; the numerical simulation results showthat the public education and social security adjusts the income distribution. In addition,we combined the data of urban-rural public education and social security, empiricalstudied of the effect of urban-rural public education and social security supply gap onurban-rural income gap. The empirical results show that the “dual” education and socialsecurity public goods supply enlarged income gap between urban and rural areas, and toa certain degree, it is one of the future dynamic factors affects urban-rural income gap.Finally, we put forward the corresponding proposal for the government regulatingpublic expenditure structure.