The Affect Of Government Transfer Expenditure On Urban-rural Income Gap

Chinese urban-rural income gap has been the focus of academic and policy. Scholars conducted extensive research on the reasons of the widening urban-rural income gap and policies to close the gap, and the government transfer expenditure is considered as a powerful lever of adjusting income gap. But our government transfer expenditure. did not play a good role in the regulation of the income gap.Based on this, the purpose of this paper is to find why the e ffect of current government transfer expenditure to income distribution in urban and rural areas is not obvious,and I hope to take effective measures to narrow the income gap between urban and rural areas through the analysis of government transfer expenditure, and improve income distribution state.Based on the reading and combed a lot of domestic and foreign literature about government transfer expenditure on income gap of residents,I found that on the relation of government transfer expenditure and the income gap of residents, domestic scholars probably hold two representative views. One view is that the government transfer expenditure narrowed the income gap between residents, another view government transfer expenditure expanded the income gap.In this paper, by using time series data, empirical analyze the effect of government transfer expenditure, social security expenditure, expenditure policy of subsidies, tax expenditure to urban-rural income gap, and concluded that the increase of Chinese government transfer expenditure and social security expenditure will lead to the widening income gap between urban and rural areas, and the policy of subsidies spending and tax expenditures will narrow the income gap between urban and rural areas. Finally, according to the empirical results, we made some improvement policy recommendations of government transfer expenditureThis paper is divided into five chapters. The first chapter introduced the basis and practical significance of the paper, and the researc h dynamic of government transfer expenditure from the domestic and foreign. The second chapter elaborates the relationship between the principle of government transfer expenditure and income distribution, and gives theoretical basis of the government trans fer expenditure to narrow the gap between the urban-rural income distribution. The third chapter analyzes the current situation and the status of urban-rural income gap and metastatic government spending. The fourth chapter, on the basis of a detailed theoretical analysis,I establish four VAR economic model, using unit root test, cointegration, impulse response function, variance decomposition and Granger causality test econometric methods, from two aspects of scale and structure,to identify the relation of government transfer expenditure and urban-rural income gap,and analyze the main problem of social security expenditure, expenditure policy of subsidies, tax expenditure to narrow urban-rural income gap on the base of the results of empirical analysis. Fifth, on the basis of a comprehensive analysis of these problems,we put some policy suggestions of perfecting government transfer expenditure system and enhancing the level of household welfare.