The Impact Analysis Of Social Security Expenditures On The Income Gap Between Urban And Rural Residents

In recent years, the income gap between urban and rural residents in China has been shrinking every year. However, this gap is still at top ranks among the world. From the perspective of the national macro-level, the main goals of current social security work of the government are to establish a more equitable and sustainable social security system and deepen the reform of medical and health system. And these are also necessary actions for building a harmonious society. As a regulator of the income distribution, social security system should serve to narrow the income gap and promote social equality and justice. However, urban-rural dual system in China has resulted that social security system cannot act its due role. Moreover, the expansion of the income gap between urban and rural residents has harmed the fairness effects of the social security system, and strengthened urgency for reforming current social security system. Established on China’s national situation, this paper selected related data of social security expenditures and income of urban and rural residents in 31 provinces (autonomous regions and municipalities) from 2007 to 2013 as research objects. And then, based on theory of income distribution and the existing research literatures, the paper collected the information on society security expenditures and current income situation of urban and rural residents, analyzed interaction mechanism between social security expenditure and the income gap between urban and rural residents, and empirically tested the impact of social security expenditure on the income gap between urban and rural residents. From aspect of theory, the research on the issue discussed above deepens the understanding of mutual effects between social security expenditure and income gap between urban and rural residents. To some degree, it is meaningful for completing related research on social security. From aspect of practice, the research contributes to recognizing shortages of our current social security system. And it is meaningful for perfecting social security system and narrowing the income gap between urban and rural residents in some degree.By combing the panel data of 31 provinces (autonomous regions and municipalities) in China from 2007 to 2013 and combining existing system background and theoretical basis adequately, this paper did the research on the relationship between social security expenditure and income gap between urban and rural residents from perspective of theory, and it empirically tested the impact of social security expenditure on the income gap between urban and rural residents by using the short panel fixed effects model. The research pointed that: the social security expenditures in China from 2007 to 2013 showed an ascending trend and the income gap between urban and rural residents showed descending trend. However, the current data displayed that though social security expenditure and income gap between urban and rural residents are negative correlated in current stage, the statistic results are not significant. The reasons are that our social security system has obvious bias on urban areas because of long-term dual social structure in China and the development of social security system is significantly incomplete in rural areas. Based on results of the research, this paper puts forward some recommendations in order to deepen the reform of social security system, that we should make adjustments from the structure, reform the existing social security model, expand reform coverage and increase farmers’ income, thus narrowing the income gap between urban and rural residents and reaching the goal of building a harmonious society.