Empirical Analysis Of The Impact Of International Trade On Income Gap In Urban-rural Of Central China

As with the reform and open carried out, both the economy and international trade has improved much. While at the same time, we have to know that the gap between urban and rural has also been enlarge.Based on the data from 1990 to 2013 of six provinces of Central C hina, we choose the index, theil, measuring the income gap of urban-rural of Central China as the explained variable, and choose foreign trade dependence, degree of dependence on import, degree of dependence on export and degree of dependence on FDI as mainly explaining variables. What's more, we add economic development level( average GDP), human capital(years of receiving education per person), and structure of industry of Central C hina(the ratio of primary industry of GDP) as the controlling variables in the model to analysis the impact of international trade on income gap of urban-rural in Central C hina in the long run.First, according to the feature of theil index, we break the income gap into three parts, income gap between urban and rura l, income gap in urban and income gap in rural, so as to analysis ratio of contribution of the three kinds of income gaps, structure and resource of the total income gap. The result shows that the gap between urban and rural explains most part(almost 90 p ercent) of the total gap. Next, we use Grey Correlation Analysis(GRA) to calculate the degrees of association of foreign trade dependence, degree of dependence on import, degree of dependence on export, and degree of dependence on FDI with theil index separately. The result shows that there are high correlation between international trade and the income gap of urban-rural in Central C hina, no matter in what kind of income gap. Based on above, we use co- integration technology to analysis the relationship between import-export economy, FDI and income gap in the long time further. According to the result, we can see that the import-export economy tends to enlarge the income gap between urban and rural and of the urban but help to reduce the gap in rural, while FDI has the opposite effect. And we also find that the import economy has a larger influence on theil index than export economy under the same condition.