Research On The Factors Of Financial Expenditure Of Income Disparity Between Urban With Rural Residents Of Shandong Province

Since the reforming and opening up, Shandong’s Economics has showed a rapiddevelopment momentum. The quality of residents’ life has been significantly improved.But with the development of economics, income distribution gap between urban and ruralareas has begun, which would bring potential problems of economical development andsocial stabilities in Shandong Province. This article studies the status of urban-rural incomedistribution gap of Shandong Province. Through theoretical analysis and empirical researchpoints to factors that affect the gap between urban and rural residents’ income distribution,we put forward a number of policy recommendations to narrow the gap.This paper referred a large of literature, including the analysis of the situation inShandong Province, urban and rural incomes, changes in basic living conditions, incomesources and the trend of urban-rural gap. We explore the urban-rural income gap inShandong Province since the eighties of20th century. Then we use theoretical andempirical analysis on the factors of financial expenditure. In the empirical analysis, theratio of income of rural residents and urban residents is the dependent variable. Theagriculture expenses, education expenses, health care expenses, administration expensesand social security and employment of local government expenditure are the ratio ofindependent variables. Through ADF stationary test, cointegration test, Granger causalitytest and multivariate linear regression analysis, we find the direction of the relationshipbetween income distribution with the right of the gap between urban and rural residentsand the comparison of the factors. Empirical results showed that financial expenditureplayed great effect on the income distribution gap, in which expenditure on agriculture,education expenditure, health expenditures and expenses on social security andemployment can reduce income distribution gap. We proposed policy recommendations toreduce Shandong Province’s urban-rural income distribution gap finally.