Research On Income Gap Of Regional Differences Between Urban And Rural Areas In China

Since reform and opening up, living standards of China have greatly improvedalong with the rapid economic deve lopment and further deepening of reform, however,at the same time the residents’ inco me gap between urban and rural is growing, theregiona l urban-rural inco me gap has formed a certain gradient difference. Theexistence of regiona l income gap differences between urban and rura l areas has been aserious impedime nt in realizing the goals of building a moderately prosperous societyand socia l harmony and stability, and it also has become a real problem whic h is anurgent need to solved, this paper quantitatively analyze the regional d ifferences ofurban-rural income gap, and also carry on empirica l inquiry on the causes andinfluencing factors of regional differences.This paper first describes the connotation and measurement method of urban-ruralincome gap, and after comparing d ifferent measurement method, this paper choose theThe il index to measure the income gap between urban and rural areas, then ana lyzedthe formation mechanism o f the urban-rural income gap and reviewed the theory of theurban-rural income gap. Secondly, calculated the The il index of eastern region, centraland western regions of the rura l-urban income gap in China, based on dynamic factormodel in state-space form and the Kalman filter theory to decompose the The il indexof urban-rural income gap and obtained common factor,the eastern trait factor, centraltrait factor, western trait factor sequences of urban-rural income gap, after that is acalculation of the contribution factor levels of these sequences.Thirdly, this part is based on analys is of mecha nism of urban and rural incomegap and availability of data, the paper select five ind icators which are the le vel ofurbanization, economic development leve l, industria l institutions, human capita l andfina ncia l deve lopment to build influenc ing factors whic h have impact on commonfactor and idiosyncratic factors of urban-rural income gap. Based on the descriptiveanalys is of the current situatio n of above influenc ing factors in the national andregiona l areas, and then carry on emp irica l analysis on common factor andid iosyncratic factors of eastern, central and western areas through the dyna mic modelto obtain coefficient sequence of the above common factor and id iosyncratic factors,and get the leve l of the contribution rate of common factor and id iosyncratic factorsthrough VAR, after that is the analysis and elaboration of the results.Fina lly, this paper based on emp irical results, from two perspectives, offer recommendations to narrow the income gap between urban areas and rural area.Meanwhile, from the nationa l perspective to narrow the inco me gap between urbanareas and rural area and offer polic y recommendations of narrowing the income gapbetween urban and rural areas as well as co-ordinating the developme nt of differentareas.