A Study On The Effect Of Government Expenditure On Urban-rural Income Inequality In China

With the development of economy,the traditional income distribution system is gradually replaced by a diversified distribution system,making the income of residents more diversified,the income level of urban residents and rural residents have been significantly improved.However,due to the relevant state system,economic development conditions and their own ability to endowment,with the development of economy,the income gap between urban and rural areas has been expanding.In general,in the early stages of economic development,Urban and rural residents income will inevitably exist a certain gap,and this time the gap may also be conducive to promoting economic development.But if the urban-rural income gap is too large,it will hinder economic development and disturb social stability.As there is a "failure" phenomenon in the market regulation of income distribution.We cannot rely on the market to automatically adjust the income gap between urban and rural areas.The income gap between urban and rural areas only can be adjusted by the way of government intervention,Therefore,the government should increase the degree of attention to the urban-rural income gap,Urban-rural income gap is adjusted by the use of appropriate policy instruments to perform its function of income redistribution.Based on this,this paper studies the relationship between government expenditure and urban-rural income gap from the aspects of government expenditure scale and government expenditure structure.In order to study the mechanism of government expenditure and urban-rural income gap,this paper first combs the relevant literatures on the relationship between government expenditure and income gap at home and abroad.Then it introduces the relevant measurement index and method of government expenditure and urban-rural income gap.Secondly,the relationship between government expenditure and urban-rural income gap is analyzed theoretically.Based on the panel data of 31 provinces and cities in China from2005 to 2015,this paper makes a descriptive statistical analysis of the scale of government expenditure(absolute and relative),structure and urban-rural income gap.From the descriptive analysis,it is concluded that there is a negative correlation between government expenditure scale,government transfer expenditure and urban-rural income ratio.There is a positive correlation between the government purchase expenditure and the urban-rural income ratio.Then,through the construction of static and dynamic panel data model,the paper studies the relationship between the government expenditure and the urban-rural income gap.Finally,according to the empirical conclusion,the corresponding policy suggestions are provided for the relevant departments.The results are as follows: The increase in government expenditure is conducive to the reduction of urban-rural income gap.Government transfer spending also contributes toimproving the income gap between urban and rural areas,while the government's purchase expenditure is not conducive to the narrowing of urban-rural income gap.Therefore,according to the results of the study,this paper proposes the following policy recommendations to improve the current situation of urban-rural income gap: Increase the total size of government spending,rational use of government funds.Increase government transfer expenditure,establish a standardized transfer payment system.Reasonable arrangements for the government purchase expenses,Increase spending on agriculture.