Study On How Local Public Expenditure Affects The Urban-rural Income Gap

In the process of building a harmonious society, we have made great progress and impressive performance. However, we have also met lots of difficulties, one of which is the widening gap between the rich and the poor and widening urban-rural income gap is the major one. A world-wide view of income gap is impossible to avoid under condition of market economy.Governments should take measures to intervene the widening of gap by some policies without delay,otherwise economical and social problems will arise.At a more mundane level, countries whose urban-rural income ratio above2are rare. According to China’s statistics, it’s difficult to get years of urban-rural income ratio below2.1n2013, the ratio is3.03. It is expected that it has a major and immediate significance to make studies on the problem of urban-rural income gap for supplying operational policy suggestions to redistribution of income and reducing negative effects of widening urban-rural income to the development of economy and progress of society.Firstly, we take three indexes, Lorentz Curve,Gini Coefficient and Engel Coefficient to analyze the current situation of urban-rural income gap in China.Meanwhile, we get the component elements of urban residents’and rural residents’ income according to the statistics, that is, the major proportion of urban residents’ income is wage income and transfer income and the major proportion of rural residents’ income is net income of household business and wage income. It is concluded that the reason why there is wide gap between urban and rural income is not because urban residents’income is too nigh, but rural residents’income is too low.Secondly, we elaborate three typical expenditures, that is, expenditure for supporting agriculture, expenditure for supporting education and social security expenditure expenditure. It is concluded that educational expenditure and social security expenditure has positive correlation with urban-rural income gap, but expenditure for supporting agriculture has negative correlation with urban-rural income gap by two methods of academic and empirical test. And then we get the same conclusion as the above by making the use of statistics of Jinzhou New Area. Finally, We offer three financial policy suggestions from increasing investment of rural basic educational public goods, expenditure for agriculture and Strengthening rural social security investment.