Urbanization Impact On The Income Gap Between Urban And Rural Areas

World economic development process is accompanied by urbanization andurban-rural income gap problem. The academic circles haven’t reached a consensusabout the impact of changes in the level of urbanization on the urban-rural income gap,although many of them believe the urbanization will narrow the gap. Based on theanalysis of urbanization and urban-rural income gap movements in China and thereview of Dualistic Economic Structure Theory and the theory of the development ofurbanization, this paper propose the hypothesis that urbanization can narrow theincome gap between urban and rural area. Use the mathematical and econometricmodel to empirically analyze the impact of urbanization, non-agricultural employmentand urbanization lag factor on urban-rural income gap. In order to solve the problemof endophytism in the model, this paper uses panel data to expand the sample,formulate structural equation groups and use control variables to verify therelationship between urbanization and non-agricultural employment and income gapbetween urban and rural areas. Given the uneven development of various regions ofChina, the panel sample is divided into three parts: eastern area, central area and westarea. Then explore the impact of the level of urbanization on the income gap betweenurban and rural areas separately. And to make policy recommendations more in linewith local development based on the characteristics of the empirical results. Byaccelerating the non-agricultural employment to promote urbanization of thepopulation so as to narrow the income gap between urban and rural areas; objectivelyanalyze characteristics of urbanization and urban-rural income gap among differentareas. These have a positive effect on exploring the ways or methods of promotingpopulation urbanization to narrow the income gap between urban and rural areas.This paper is divided into five parts: Part I: Introduction. This part focuses onthe background and significance of this study. To Review the existing researches onrelated topic and propose research programs and methods of this paper. Part II:International comparisons. Analyze the urban-rural income gap under the theory ofDualistic Economic Structure and make comparative study of different policies of U.S,Japan and Taiwan on urbanization. Part III: Describe current situation andcharacteristics of Chinese urbanization and urban-rural income gap and maketheoretical analysis of the relationship between urbanization and income gap betweenurban and rural areas. Part IV: An Empirical Study of the relationship between Urbanization and the urban-rural income gap. On the basis of mathematical models,use time-series data from1978to2012to make cointegration analysis of variablessuch as urbanization, non-agricultural employment, lag factor of urbanization and theurban-rural income gap. Using structural equation methods to make regressionanalysis for2010-2012provincial panel data to explore the impact of control variableson urbanization and the urban-rural income gap. The fifth part of this paper enclosesthe conclusion and policy recommendations. Policy recommendations will be madebased on the empirical findings of different areas in China.