A Study Of The Income Gap Between Urban And Rural Residents In China Based On Human Capital Perspective

Since the reform and opening up, the income of urban and rural residents has been growing rapidly in China. In 2012, urban resident’s disposable income and rural resident’s net income has reached 24564.7 yuan and 7916.6 yuan respectively, which are 71.62 times and 59.52 times more than those in 1978. It shows that the achievements of China’s rapid economic development have been shared by urban and rural residents to a certain extent. However, in the process of income growth, urban and rural residents income gap has continually expanded, and has intensified. Therefore, to explore how to narrow the income gap between urban and rural areas so that all people can enjoy the fruits of economic development equally, has become an inevitable issue for China’s economy.This paper that mainly researches the income gap between urban and rural areas based on human capital perspective, decomposes the human capital factor into four aspects, namely the difference of health investment, the difference of education investment, labor mobility difference and fertility difference, and then analyzes how the difference of human capital affects the income gap between urban and rural areas from these four aspects. Hereafter, this paper uses spatial econometric model to carry on an empirical analysis, and obtains the conclusion that the gap between urban and rural residents’personal health care spending, government investment difference of urban and rural residents health care, the gap between urban and rural residents’ personal cultural and educational entertainment spending, the total amount of rural labor and fertility rate difference between urban and rural residents have significant positive correlation with income gap in urban and rural areas, while the difference of urban and rural compulsory education investment from government influences the gap between urban and rural residents per capita income insignificantly. Finally, based on the results of the empirical analysis, this paper puts forward the following four suggestions to solve the problem of urban and rural residents income gap:firstly, consummates the rural health care system, improve the rural medical conditions; secondly, change rural residents’education concept, increase rural education investment; thirdly, improve rural employment environment; lastly, implement an differential birth policy between urban and rural areas.The innovations of this article are the systematical and detailed analysis of the urban and rural residents income gap of our country from human capital sight, and the use of the spatial lag regression model and an econometric analysis software such as Matlab as the auxiliary research tool to make an empirical analysis of the relationship between the differences of human capital and urban and rural residents income gap.