The Research On Welfare Financial Expenditure’s Effect On Regulating Urban-rural Income Gap

Since China implemented its reform and opening up policies, the economyand society develops rapidly. At the same time, the quality of people’s life riseto a new level. Under the dual economic structure, with the planned economytransformed into the socialist market economy, income distribution systemestablished in which distribution according to work is dominant and a variety ofmodes of distribution coexist. As giving priority to efficiency with dueconsideration to fairness, the income gap between urban and rural residentinevitable expanded, which not only affects the economic growth but also leadsto social inequality. As a socialist country, our ultimate goal is to achievecommon prosperity. For this, we need to narrow the income gap. Because theincome gap between urban and rural makes the greatest contribution, weshould take responsibility to bridge the gap effectively. The problem above canbe solved in different ways from a couple of perspectives. As an available tool,financial expenditure, especially welfare parts, is capable of regulating incomedistribution gap. Based on plenty of authoritative statistic data, this article, byadopting the methods of normative analysis and empirical analysis, exploresthe relationship between welfare financial expenditure and the incomedistribution gap.The thesis consists of six parts. Part one is mainly to introduce thebackground and significance of the study. Simultaneously, it includes methodsand literature review. In the second part, we further study the changing pathsof internal and external income gaps. The path of gap between the urban areaand the rural area shows tortuous fluctuation state. Meanwhile, the internalgaps have been widened. Particularly, the internal gaps in the rural area werebigger than that in the urban area. Then, the deep-seated reasons ofurban-rural income gap were provided from the perspectives of system andstructure. Part three analyzed the changing orbit of financial expenditure fromscale and structure and found that the share of welfare spending wassqueezed out which indicates the irrationality of structure. In the fourth part,education, health, social security and agriculture expenditure were chosenwhich represent welfare spending so as to analyze regulatory mechanism and current situation to the income distribution gap. Generally speaking, agriculturespending should not be included into welfare parts. However, it makessignificant contribution to increase farmers’ income. So we take it intoconsideration as welfare spending. In the fifth part, a econometric model wasestablished and it comes to the conclusion as following: educational spendingwidens the gap; whether the health expenditure is good to income distributionis not significant; to some extent, increased social security spending takesadvantage to narrow the income gap between the urban area and the ruralarea; financial agriculture expenditure increases income effectively. Finally,this thesis draws the conclusion according to the analysis above and putsforward relevant suggestions.