Impact Of Urbanization On Urban-rural Income Gap In Shandong Province

Since more than thirty years reform and opening-up, the economics has been rapid developed and people’s living standers have been greatly improved in Shandong province. However, with the development of economics, the problem of continues widen income gap between urban and rural has become increasingly prominent. Too large income gap not only restricts the sustainable and healthy economic growth but also has serious negative impact on social harmony and stability. Therefore, in the rapid development of new urbanization stage, we should focus on how to avoid the income difference between urban and rural areas continue to expand and build a fair and reasonable distribution order, and it’s the foothold of this paper.In this paper, we discussed The evolution process and current situation of urbanization and urban-rural income gap in Shandong Province. We found that the urbanization level in Shandong province as a whole is not high, and the internal showed regional differences. And the income gap between urban and rural areas below the national average, but it is still too high compared with other provinces in eastern, and the internal also showed regional differences.Then, we divided urbanization effect into three aspects which is population structure, industrial effect and economic growth according the concept of urbanization; and respectively study the specific influence mechanism of these three aspect of urbanization to urban-rural income gap. Then, this paper uses granger causality test, cointegration test, error correction model, impulse response and variance decomposition empirical method to test the specific influence of urbanization to income gap between urban and rural areas in Shandong province from 1980-2012.Finally, this paper got the following conclusions through the analysis:First, Population urbanization, the third industry development and economic growth are both the reasons for the changes in the income gap between urban and rural areas. Furthermore, Population urbanization will expand the income gap between urban and rural areas, the third industry development, economic growth will promote the income gap.Second, the development of the third industry will narrow the income gap between urban and rural areas in Shandong province, the population urbanization level of ascension, and economic growth will expand the income gap between urban and rural areas in Shandong province.Third, in the short term the most important influence factor to income gap is urbanization, but in long term the most important factor is economic growth.In the end of this paper, some corresponding policy recommendations are given according the study result.