The Impact Of Productive Finance On Farmers’Income Mobility

Since the implement of the reform and opening up polic y,the economic development in China has been rigorous,however,the income distribution has been worsen for a long time.The continuous and healthy economic development of a society depend on the social stability,and in a stable society, the income distribution gap must not be large.This article will analyze the issue of the unequal income distribution between residents in rural area in China from a dynamic perspective.Firstly, we measure the income mobility of farmers in China using CHNS data between1989and2009.Since we consider that financing plays an important role in improving the income status of farmers,we further differentiate the productive financing and consuming financing(because we think it is the productive finance that works to improve the income status of then based on previous step,we analyze the influence of productive finance on income mobility of farmers through econometric model,to find out whether or not the productive finance has positive impact on farmers’income mobility. Finally, we will further analyze the factors that influence the obtaining of productive financing fund, expecting that our research will provide some useful suggestions for the ongoing reform of rural finance in China, as well as the government income distribution policy decision-making.We obtain several results through our research:first of all, using the latest data, we found that the income mobility of rural residents experienced a U-shaped trend, followed by a steady decline, which is not a good sign. Secondly, our empirical studies have shown that productive finance has a positive impact on imcome mobility, thus, our previous forecast has been verified. In addition, the level of education that the head of a family received, the number of family members, and changes of the ratio of agricultural income to the total household income have different impact on farmers’ income mobility too. Lastly, the fixed effects model shows that among the factors that influence the of productive finance, the age of the head of a family and the amount of land that a family owned have positive impact on the obtaining of productive finance, while the number of family menbers has negative impact on it.Based on the above analysis, we provide some policy recommendations for the ongoing reform of the rural finance:including that government should pay more attention to the creation of non-farm employment opportunities for rural residents, while providing the financial support for agriculture. Government must assume more responsibility when it comes to job opportunities and employment information for farmers. Besides, government should raise the level of welfare of the rural areas and improve the social security system, to really help the farmers to reduce the family burden.The innovation of this paper include:we analyze the economic impact of financing from microscopic point of view, and further differentiate the productive finance and consuming finance, which is seldom seen in previous research; Secondly, most previous research analyze the issue through cross-sectional data, which only reflect the static pettern of income inequality instead of from a dynamic perspective through panel data, which we called income mobility. The empirical research model that have been used in this study require a high quality data process, therefore, the convergence of various research methods as well as data processing and analysis quality is the key to this article.