Empirical Analysis Of Income Gap Between Urban And Rural Residents In Shanxi Province

Since1978when Chinese economy opened up, economic reform and developmenthave become the main focus of government. Tremendous progress has been made eversince. Shanxi, as a underdeveloped inland province, also enjoyed steady increase ineconomic output, growth of standard of living as well as improvement of economicstructure. However, widening income gap between rural and urban residents as a resultof growing economic disparity severely constrains the development of economy inShanxi Province, and hinders the construction of a harmonious society. Therefore, it isimportant to analyze the social-economic phenomenon of rural-urban divide, conductresearch into the causes of and factors that impact the emergence and growing of thephenomenon and come up with corresponding policy proposals.This paper will first present a brief review of existing researches on this subjectand elaborate on the significance of the research.Secondly, the study will seek to deliver a full-spectrum modeling of existingincome divide between rural and urban residents in Shanxi Province. From1978onward, income gap follows a W shaped trajectory; the regional difference of residents’income gap between urban and rural areas in Shanxi showed, compared to southerncities, the gap between northern cities is bigger, even lower than the national average;meanwhile, by analyzing the source of income structure, the salary income and transferincome have larger influence on urban and rural residents’income gap.Thirdly, the author analyzed the factors impacting income gap between urban andrural areas in Shanxi from two aspects. When looking at the economic factors there aresome points should be mentioned: the economic growth, economic systemtransformation, the urban-rural dual structure, urban-biased policies, low levelurbanization, and the imbalance development on urban and rural financial institutions,which effected residents’ income gap. On the other hand, by analyzing thenon-economic factors, the paper put its attention on the characteristics of agriculture andfarmers, and the geographic and transportation situation.Finally, after collecting macro statistical data from1978to2012, summarizing,classifying and calculating, the author adopted a multiple linear regression analysis,using up to6indicators, from GDP per capita in Shanxi Province, coefficient ofurban-rural dual structure, the level of urbanization, the process of industrialization, the proportion of rural fixed asset investment in the whole society fixed assets investment tofinancial development efficiency. Analysis results showed that the main factorsinfluencing the residents’ income gap between urban and rural areas in Shanxi Provincelie in: urban and rural dual economic structure and the low rural fixed asset investment.In the conclusion section, on the basis of the main factors influencing residents’income gap between urban and rural areas in Shanxi Province, the author presentedseveral corresponding macroscopic policy proposals.