Research On The Impact Of Foreign Direct Investment On China's Urban-rural Income Gap

The volume of China's foreign direct investment has ranked second in the world right now,and the integration process with various economies in the world has been accelerating,which has led to the continuous improvement of China's economic level,and also attracted widespread attention from scholars.However,during this period,a series of phenomena have also emerged.One of them is that the income distribution between the urban and rural groups in China is gradually unbalanced.Besides,the level and improvement of income in rural areas are not as good as in urban areas.Based on the review of existing related studies,it is found that there is no consistent conclusion on the relationship between FDI and urban-rural income distribution.There are many different conclusions on this area,including negative effects,positive effects,or no effects.Moreover,most of the existing studies on the impact of FDI on the urban-rural income gap focus on the overall relationship between the two variables.The research on channels of this question are fewer,and the methods are not uniform.After the gradual reform of household registration system and the relaxation of the regulation of labor mobility in 1978,the phenomenon of labor mobility between urban and rural areas and between regions began to appear.At one time,the tide of migrant workers from rural areas became a hot issue for the society.Studies showed that labor mobility also has a significant effect on the urban-rural income gap.The research content of this paper is based on exploring the impact of FDI on the urban-rural income gap,and whether labor mobility is an important intermediate channel,and how labor mobility affects the effect of FDI on the urban-rural income gap.In terms of theoretical value and social value,the research content of this article is meaningful.The research content is divided into six chapters.Chapter 1,Introduction,mainly expounds the research background and significance of this thesis;defines the concepts of foreign direct investment,labor mobility,and urban-rural income gap;explains the research content and methods of the article;points out the innovation points and deficiencies of the article.Chapter 2,Theoretical Review and Literature Review,mainly reviews the theories on foreign direct investment,labor mobility and income distribution.It combines the relevant domestic andforeign academic research in this field,including the employment effects of FDI and the impact of labor mobility on the urban-rural income gap,and the impact of FDI on the income gap,etc.,and the overall situation of relevant research literature is reviewed.Chapter 3,Mechanisms between FDI,Labor Mobility,and Urban-rural Income Gap.First,useing deductive reasoning to prove the existence of foreign direct investment on the urban-rural income gap.However,although labor migration factors were introduced during the certification process,it does not specifically reflect the necessity,why and where the labor mobility factors exist.Therefore,this chapter further explores the mechanism of FDI on labor mobility and the mechanism of labor mobility on urban-rural income gap in different regions to find out the transmission path of the impact of FDI ? labor mobility ? urban-rural income gap.Chapter 4,Status of FDI,Labor Mobility and Urban-rural Income Gap,analyzes the status and changing trend of FDI,labor mobility and urban-rural income gaps in order to have a clearer overall grasp of the three variables,and make a prediction of the transmission mechanism of the previous chapter that is suitable for China's situation.Chapter 5,Analysis of Empirical Tests,do empirical tests of panel data of 30 provinces(municipalities,autonomous regions)in China from 2000 to 2017 using fixed effect model.Regression was performed using the full sample and data from eastern,central,and western regions to examine the different impacts of FDI on the urban-rural income gap at the national level and in different regions;tests and measures the mediating effects of labor mobility at the national level and in each region.Chapter 6,Research Conclusions and Policy Recommendations,is the research's conclusions and policy recommendations.It summarizes the theoretical transmission mechanism and empirical test results.Based on the research conclusions,it proposes relevant ways to reduce the urban-rural income gap in China from the perspective of foreign direct investment and industrial structure transformation.The possible innovation point of this article is to examine the role and magnitude of labor mobility in the impact of FDI on the urban-rural income gap,and to derive the transmission path of the effect of FDI on the urban-rural income gap through labor mobility.The thesis using fixed-effects models and random-effects models empirically tests the panel data of 30 provinces(municipalities,autonomous regions)in China from 2000 to 2017.Here shows the mainresearch conclusions of the thesis.In terms of nation level,FDI has an inverted U-shaped effect on the urban-rural income gap in China,and most provinces are already on the right side of the inverted U-shaped curve.The test results of the mediating effect show that the increase in the proportion of FDI can promote labor outflows and reduce the urban-rural income gap by promoting labor outflows,but it is only achieved partly through labor mobility.The relationship between FDI and the urban-rural income gap in the eastern region is also an inverted U-shape trend.However,as far as the specific situation of the region is concerned,there are still some provinces in the left side of the curve.The test results of the mediating effect show that the decline in the proportion of FDI will reduce the urban-rural income gap by promoting labor inflows in the eastern region,but it is only achieved partly through labor mobility.In the central region,FDI can reduce the urban-rural income gap,but there is no inverted U-shaped relationship between them.The mediating effect test proves that the rise in FDI proportion has reduced the urban-rural income gap by promoting labor outflow,and it is achieved entirely through labor mobility.FDI and labor mobility in the western region have no significant impact on the urban-rural income gap.In addition,other control variables have been added to the model.The study found that the level of economic development,the rate of investment in fixed assets,the employment structure,the industrial structure,and the degree of government intervention will reduce the income gap between urban and rural areas.The improvement of infrastructure level will have an expanding effect on the income gap between urban and rural areas.However,in the verification by three areas,the performance results of some control variables are different.