Urbanization And The Change Of Income Disparities Between Urban And Rural Regions In China

Urbanization is a necessary process for the development of national productivity,technological progress and industrial structure change,as well as the natural law of human social and economic development.In the third session of the Twelfth National People's Congress,Premier Li Keqiang proposed that urbanization is the fundamental way to narrow the income disparities between urban and rural regions.However,although the research on the changes of urbanization and income disparities between urban and rural regions has never stopped,there is still no consistent conclusion.One view is that urbanization has widened the income disparities between urban and rural regions.The other view is that urbanization reduces the income gap between urban and rural areas.There is still another view that there is a nonlinear relationship between urbanization and income gap between urban and rural regions,of which the discussion about whether there exists law of inverted U between urbanizaiton and income disparities between urban and rural regions is controversial,and some researchers even got completely opposite positive U-type conclusion.This paper based on relevant literature about urbanization and income gap between urban and rural regions,firstly,using spatial econometric methods and taing 1996-2013 available provincial panel data as sample,to study the relationship between urbanization and income disparities between urban and rural regions from national and regional level.Furthermore,using method of mediation effect analysis,to test whether household registration system and urban biased policy are important ways to cause changes of income disparities between urban and rural regions in the process of national urbanization,and whether regional urbanization affects income gap between urban and rural areas through industrial structure change.Finally,this paper will get valuable policy implication from conclusion of the study,and judge whether urbanization could be taken as a way to narrow income disparities between urban and rural regions at present or in the future for a long period,how urbanization plays the role of reducing income gap between urban and rural areas more effectively.This paper get the following basic conclusions through study:(1)Based on national scale,the study found that no matter through overall test or stage test,urbanization and income disparities between urban and rural regions shows an inverted U relationship that firstly increasing and then diclining.Demarcation point appeared in 2005,that is,urbanizaiton expanded income disparities between urban and rural areas during 1996-2004,while it decreased income disparities between urban and rural areas during 2005-2013.Based on regional scale,this paper discovered that there also existed inverted U relationship between urbanization and income disparities between urban and rural regions during 1996-2013.Demarcation point of eastern,midlands,western appeared in 2002,2006,2011.(2)Through meditation effect test,the study found that household registration system is an important mechanism to affect income gap between urban and rural areas in the process of urbanization.At the same time,urban biased policy expanded income disparities between urban and rural regions during 1996-2004.However,it could not explain why income gap decreased during2005-2013.This paper also discovered that urbanization in eastern affect income disparities between urban and rural regions through industrial structure change.Due to insufficient optimization and upgrading of industrial structure,income disparities between urban and rural areas expanded in midlands and western,while they are not able to support why income gap decreased during the research period.(3)To sum up,urbanization and urban-rural income gap exists an inverted U relationship,and has ushered in inflection point.Urbanization and income disparities between urban and rural regions have stage characteristics.With development of economy and urbanization,urban-rural income inequality of China exists law of inverted U,that is,income disparities between urban and rural regions expands in the early stage of urbanization,while it narrows in the advanced stage of urbanization.Meanwhile,urbanization and income disparities between urban and rural regions have regional difference.Regional economic development is different,as well as position of inverted U curve.There is a better effect of development of urbanization in developed regions thus income gap between urban and rural areas will enter the declined stage much faster.We can derive two policy implications from stage characteristics and regional difference of relationship between urbanization and income disparities between urban and rural regions:(1)At present and in the future for a long period in China,the direction that decreasing income disparities between urban and rural areas through urbanization is correct.To achieve this goal,we must attach importance to the formulation and implementation of relevant policies.(2)At the present stage,the conclusion that urbanization can narrow the income gap between urban and rural areas is not suitable for each region.Especially for the economically backward areas,the phenomenon that urbanization brings increasing urban-rural income gap is a necessary process.We should actively look for factors that hinder narrowing income gap between urban and rural regions,thus make an ahead of arrival of inverted U inflection point and reduce the longitudinal level.