Empirical Study On The Influence Of Fiscal Decentralization On The Income Gap Between Urban And Rural Residents In China

Long-standing problem of income gap between urban and rural residents in China, especially after the reform and opening up policy in 1978, C hina’s economy entered a period of rapid development, but the income gap between urban and rural residents growing so fast. In 1994 C hina’s implementation of the tax system reform of the year, urban per capita disposable income equivalent to 2.86 times the net income of rural households, then the income of urban and rural residents in C hina has experienced the process ratio decreased, increased then decreased. Since 1994, China’s urban and rural residents’ income ratio reached the highest in 2007 and 2009(3.33), and in the small fluctuations in other years of urban and rural residents income ratio, are maintained at around 0.1 fluctuation, in 2014 the income of urban and rural residents’ ratio down to 2.92. If you join the non monetary factors(such as the gap between the medical and health, basic education, transportation etc.),the income gap between urban and rural residents in China will be greater. The income gap between urban and rural residents in C hina continued to pull will seriously affect the quality of life, the living standards of rural residents, easily lead to mass incidents, have a negative impact on economic development, social harmony and stability. Therefore, research on the factors affecting the growing income gap between urban and rural residents in China has great social significance and theoretical value.From the research results of domestic and foreign scholars, the basic is to explore the urban-rural income gap from the economic growth, the level of urbanization, industrialization, openness, two yuan of social economic structure, the supply of public goods and other factors, but few studies have directly at the local government financial functions under the fiscal decentralization weakened and cause the income gap between urban and rural residents change. Therefore, in this paper, Lewis’ s two dual economy structure theory, the classical theory of income distribution and the new classical theory of income distribution, the traditional theory of fiscal decentralization and the second generation based on the theory of fiscal decentralization, this paper elaborates the concepts related to the income gap between urban and rural residents, descriptive analysis do current situation of income gap between urban and rural residents, on the basis of this analysis. Fiscal decentralization, weaken the impact of local government functions of resources allocation, income distribution function on the change of income gap between urban and rural residents in china.Based on the analysis of specification, verification of fiscal decentralization in urban 2000-2012 years financial expenditure gap affects the change of income gap between urban and rural residents in China by using the results of simultaneous equations model. In order to make the fifth chapter of this simultaneous equation results more credible, the choice of fiscal income index, and joined the city, opening degree, two yuan of economic structure and other indicators, the results show, the lower the degree of fiscal decentralization, local government fiscal revenue accounted for the decline is the national finance income proportion, did not play a positive role in promoting to ease C hina’s widening income gap between urban and rural residents. And the distribution of our country city and countryside basic education, medical and health, expenditure on science and technology and other aspects of the serious unbalanced, further exacerbating the urban-rural income gap in china. In view of the above conclusion from empirical analysis, this paper presents the specification for fiscal expenditure of local government behavior, to encourage local governments to strengthen its income distribution, resource allocation functions, namely, by speeding up the improvement of government assessment mechanism, strengthen resource allocation function of the local government; improve the existing system of transfer payments, increase the financial transfer payment proportion increased; the rural public goods investment, infrastructure spending, promote the increase of peasants’ income; and improve the financial management system, improve the efficiency in the use of agriculture funds to alleviate urban and rural residents’ income gap.