An Empirical Study On The Relationship Between Fiscal Expenditure Structure And Urban - Rural Income Gap

Since China implemented its reform and opening up policies, the economy andsociety develops rapidly. At the same time, the quality of people’s life rise to a newlevel. However, Residents’ income gap seems to be constantly widening. In view ofthe fact that China’s urban and rural residents income gap is larger, in order toeffectively curb the trend of widening income gap between urban and rural residents，promoting harmonious social justice, the government needs to intervene the processof income redistirbution. In theory, fiscal expenditure is a kind of effective economicmeans, can be directly or indirectly affect the property of the income distirbution,increasing the social overall economic utility, promoting fair income distribution, toexpand the social welfare. Since our country’s residents’ income gap is widening andthe effect of the policy aiming to narrow the income gap between urban and ruralareas is not obvious, This article tries to study the effect of fiscal expenditure on theincome gap between urban and rural areas, to explore different mechanism on theimpact of fiscal expenditure on the income gap between urban and rural areas, inorder to further remit urban and rural residents income gap to provide some newideas.Firstly, the article expounds the theory of fiscal spending to adjust incomedistirbution, and taking Jiangsu province as an example, analyses the historicalchanges of fiscal expenditure and the income gap between urban and rural areas inJiangsu province. Secondly, based on the measuring sotfware, analyzing therelationship between fiscal expenditure structure and the income gap between urbanand rural areas empiircally by using time series. Main conclusions are as follows:(1)The fiscal expenditure is the granger reason of urban and rural residents income gap,and verified the fiscal expenditure can affect income distribution directly or indirectly.(2) The urbanization process is helpful to narrow the gap between the income of urbanand rural residents; The rapid development of economy will enlarge urban-ruralincome gap.(3) The increase in the expenditure for supporting agriculture, health care can narrow the resid’ents income gap between urban and rural areas. Fiscalexpenditure on education has failed to play the role of regulating income gap;expenditure on social security and employment which is to ensure social fairness willexpand urban-rural income gap.Finally, according to the result of empirical analysis, some targeted policysuggestions which is to narrow the resident’s income gap between urban and ruralareas are put forward.