Analyze The Urban-Rural Income Gap From The Fiscal Distribution And Land Finance Perspective

Urban-rural income gap is always a common problem in developing countries, but it is particularly serious in C hina. Due to factors of history, institutional and policy factors, The urban areas and the rural areas in C hina are highly isolated, the Urban-rural income gap has been about 2.5 at the time of C hina Reform and Opening. In a socialist country, such a huge income gap between urban and rural areas are unacceptable. We know, the C hina Reform and Opening had removed barriers between urban and rural areas, and the government introduced a series of policies to eliminate urban-rural income gap. In fact, the urban-rural income gap had never stopped expanding, especially since 1997,This paper focuses on the problem of ever-widening urban-rural income gap since 1997, and the fact of ineffective agricultural policies to eliminate urban-rural income gaps since 2003.We then research the relationship of fiscal decentralization, land finance and urban-rural income gap, revealing the factors which cause the ever-widening urban-rural income gap.We build a theoretical frame of fiscal decentraliza tion, land finance and urban-rural income gap to analyze the mechanism of fiscal decentralization and land fiscal impact on the urban-rural income gap. Then, we use the panel data of 31 provinces in 2004-2011 to analysis. The panel regression results show that: Fiscal decentralization, and land finance have a significant impact on the urban-rural income gap. Further, this paper analyzes spatial correlation MI values provinces urban-rural income gap for the purpose of establishment of spatial panel model. We found that the ability to interpret of spatial panel data model is significantly higher than non-spatial panel model, spatial lag coefficient is 0.03, the income gap between urban and rural spatial effect does exist. Results of non-spatial econometric models and spatial econometric models are all the same, but the non-spatial panel model is overestimated the indirect effects of land finance. The analysis shows that fiscal decentralization, land finance, the level of industrialization worsen the problem of urban-rural income gap, and urbanization will help remove the income gap. In order to remove the urban-rural income gap, it ought to reform land and taxation system, reducing financial dependence on land of the local government. And, it should increase the inputs of education, health care, social security and other aspects in rural areas.