Research On The Influence Of Government Human Capital Investment On Income Gap Between Urban And Rural Residents

Under the urban-rural dual economic structure,China's rural education funds are lacking in investment,and the level of human capital has not been effectively improved for a long time.The urban-rural income gap has been expanding.Urbanization can reduce the urban-rural income gap by promoting rural employment and rising income of farmers.Based on Mincer's(1974)income equation,this paper constructs the income function of government human capital investment and theoretically discusses the influence of government human capital investment on the urban-rural income gap.On the basis of theoretical analysis,this paper uses relevant data from 29 provinces(excluding Hainan and Tibet)in China from 1997 to 2016 to construct a panel model,and takes public education and public relations and health care as examples to examine the impact of government human capital investment on urban-rural income gap.The dynamic panel method is used for the endogeneity test,that is,the lag term of the explained variable is used as the tool variable to ensure the robustness of the regression results.Furthermore,the urbanization index and the interactive index between government human capital investment and urbanization are added to the equation to examine whether government human capital investment will further impact the urban-rural income gap through affecting urbanization,and draw relevant conclusions.The results show that:(1)the advancement of urbanization will help promote rural employment and farmers' income,and is an important condition for rural residents to transfer to urban areas and narrow the income gap;(2)When the government's investment in human capital is not balanced,its role in widening or narrowing the income gap is uncertain:when the government's investment in human capital is biased towards urban families already at a high income level,the government's investment in human capital will not reduce the urban-rural income gap,but will widen the income gap and even create polarization.When the government's investment in human capital favors rural families at low income levels,it will help reduce the urban-rural income gap.At the current stage of development in our country,because the government's investment in education still has an obvious trend of urban bias,the urban-rural income gap will widen,that is,the unbalanced government investment in education that favors urban residents will expand the urban-rural income gap.Whereas,as the government's investment in health care in rural areas continues to increase,the government's investment in health care has played a part in reducing the urban-rural income gap.(3)The government-biased education investment policy will affect the urban-rural income gap through urbanization.Due to the existence of the intermediate variable of urbanization,the trend of government-biased education investment to expand the urban-rural income gap will become more apparent.