The Evolution Of Urban-Rural Income Disparity And Its Threshold Effect On Economic Growth During Urbanization Process

The coexistence situation of rapid economic growth and expanding urban-rural income disparity in China has attracted Academics and Practitioners'broad attention since the Reform and Opening-up. The expansion of urban-rural income disparity is harmful to social stability, and will influence the efficiency and quality of economic development, which could affect the realization of socialism harmonious society in the long run. Under this background, how to narrow the urban-rural income disparity with promoting the economy growth healthy and stable and realize the gain of Fish and Bear's paw should be important problems to be solved, which is the starting point and foothold of this paper. This paper attempts to construct the theoretical model of labor's mobility affecting the evolution of urban-rural income disparity during the urbanization process and carries out empirical researches related to urban-rural income disparity in order to explore effective paths of narrowing urban-rural income disparity, which have important theoretical and practical significance.This paper combings and induce existed articles from four aspects containing the cause,measurement and decomposition influencing factors of urban-rural income disparity and the relationship between urban-rural income disparity and economic growth. The paper measures the urban-rural income disparity of the whole nation and every province by Theil Index method reflecting the feature of urban and rural dual economic structure in China, and analyzes the evolution features of the urban-rural income disparity. The review of existed researches on urban-rural income disparity and analysis of the urban-rural income disparity status will provide ideas and inspirations for the consequent researches.Labors appear to large-scale migration and flow during the urbanization process. Based on the starting point, the paper constructs the theoretical models which could reflect the change of the urban-rural population and income level before and after labor migration, and relaxes the theoretical hypothesis from no considering capital accumulation to considering capital accumulation which makes the models approaching to economic practice. According to the theoretical study, this paper examines the labor migration's effect on the evolution of urban-rural income disparity by distinguishing labor migration patterns empirical research using1%of the national population survey data in2005. The research on influencing factors of urban-rural income disparity is the key to look into the causes and evolution features of urban-rural income disparity. This paper makes regression analysis by mixed effect and panel fixed effect model on the basis of qualitative analysis,correlation and panel unit root tests on the relationship between influencing factors and urban-rural income disparity, analyzes every influencing factor's contribution to the evolution of urban-rural income disparity by the Shapley Value Decomposition based on regression, and sorts the role of every influencing factor according to contribution degree. This paper analyzes the threshold effect of urban-rural income disparity's influence on economic growth based on various researches on the evolution of urban-rural income disparity. The threshold effect study tests the threshold effect of urban-rural income disparity's influence on economic growth by threshold effect test,determining threshold number and value and panel threshold regression analysis, from simple to complex, from linear to nonlinear.This paper intends to discover main factors and secondary factors which influencing urban-rural income disparity by researches on the measurement,evolution features and influencing factors of urban-rural income disparity, and urban-rural income disparity's threshold effect on economic growth, which could provide policy suggestions for methods and paths to narrow the urban-rural income disparity. The paper's structure mainly include introduction articles summarization,measurement and analysis of evolution features,theoretical models and empirical test,research on influencing factors,threshold effect,conclusions and policy suggestions, and so on. The main conclusions are listed as follows through theoretical and empirical study:â… . The urban-rural income disparity has experienced four stages including first narrow(1979-1985),volatility rise(1985-1994),narrow again(1994-1997) and continued expansion(1997-2009) in China. By regions, the urban-rural income disparity'evolution locus of eastern,central,western and north-east regions is the same as the National, which appears to rise with fluctuation. Among the four regions, the urban-rural income disparity of western region is largest, central region second, north-east minimum. The urban-rural income disparity evolution after the Reform and Opening-up tends to rise with fluctuation, and the institution or policy factors may play an important role in the change of the urban-rural income disparity during the evolution process. For example, the implementation of Household Contract Responsibility System has greatly reduced the urban-rural income disparity by increasing farmers'income at the beginning of the Reform and Opening-up, and then the urban-rural income disparity expands lastly when the government shifts the reform centre from country to city. In addition, the Central Government assessing the Local Governments with the growth of GDP leads to the Local Governments'behavior with apparent urban bias. The Local Governments constitute and carry out series of fiscal,education,medicine policies with urban bias. The disequilibrium of institution distribution leads to urban-rural difference in resource allocation, which limiting the space of narrowing the urban-rural income disparity.â…¡. Theoretical study shows that:without considering the capital accumulation, rural labors'internal migration will reduce the urban-rural income disparity, while rural labors'cross-regional migration will reduce emigration and immigration region's urban-rural income disparity. When the labor quantity migrating to urban regions is equal between internal and cross-regional migration, the urban-rural income disparity of the developed regions will larger than the backward regions. When the labor quantity migrating to developed regions in cross-regional migration case is more than internal migration, the urban-rural income disparity of developed regions tends to narrow; when the labor quantity migrating to backward region in cross-regional migration case is less than the internal migration, the urban-rural income disparity of backward region will tend to expand. When considering labor migration and capital accumulation at the same time, if the urban foreign residents and local residents quantity ratio is greater than or equal to the urban capital accumulation rate, it will be better for reducing the urban-rural income disparity; while the urban foreign residents and local residents quantity ratio is less than or equal to the urban capital accumulation rate, the change of the urban-rural income disparity is uncertain. Based on theoretical analysis, this paper makes empirical test by using1%national population sample survey data of2005, the results show that:the proportion of immigrating to urban region promotes the immigration region's urban-rural income disparity but not remarkable, and the lager the proportion of rural-urban pattern in immigrating to urban region population, the urban-rural income disparity of immigration regions will expand apparently;looking from emigration region, the ratios of emigration population,rural-urban pattern emigration population urban-urban pattern emigration population neither have obvious effect on the urban-rural income disparity. Looking from cross-regional angle, the labor emigrating out the province will reduce the emigration region's urban-rural income disparity, and the labor's cross-regional migrating between eastern and middle-western regions will be better for reducing the urban-rural income disparity, although the effect is not apparent.â…¢. On the study of the urban-rural income disparity's influencing factors, correlation test shows that explanatory variables don't appear to high correlation; panel unit root test tells us that the other variables not existing unit root process except the financial development variable, are stable. The results based on panel data regression show that:urbanization,commercialize degree,opening and education development are in favor of reducing the urban-rural income disparity, while financial development,economic growth,the cross term of economic growth and urban-rural income disparity is go against reducing the urban-rural income disparity. On the Shapley Value Decomposition based on regression function, income decision function regression results show that:the other five variables except opening and fiscal support for agriculture have positive effects on resident average income, and the regression coefficients are high apparent. The Shapley Value Decomposition results show that: the ratios of income inequality explained every year are all above80%, and the explained ration are all above90%in the other year with1979being89.56%, which showing that the explanatory variables selected are competent. Economic development and urbanization are the main factors which prompting region income disparity by analysis of influencing factors'contribution.IV. Panel data regression analysis makes the conclusion:at present,the expansion of urban-rural income disparity prompts the economic growth, opening commercialize degree,urbanization and education development are advantageous to economic growth.As the Nation has carried out fiscal policies with obvious urban bias, the government's support for agriculture doesn't play an important role in prompting economic growth under the background of the shrinking of financial agriculture spending ratio. Panel threshold regression results tell us that:With the improvement of urbanization and the depth of opening, urban-rural income disparity's positive effect on economic growth exist separately dual threshold and single threshold effect when urbanization and opening are threshold variables, but the prompting effect abates gradually; with the power of government's fiscal support for agriculture, urban-rural income disparity's positive effect on economic growth exists single threshold effect when government's support for agriculture is as threshold variable,and the promoting function enhances gradually. Robust test shows that:the relusts of the urban-rural income disparity's panel threshold effect on economic growth are robust.This paper mainly studies the evolution of urban-rural income disparity, influencing factors and its threshold effect on economic growth during the urbanization process, which discovers the relationships between urban-rural income disparity and urbanization. During the urbanization process, the base of urban-rural income disparity's expansion is consolidated under the implementation of heavy industry preferential development strategy in the period of planned economy system which originates from urban-rural dual economic structure. With the industrial and agricultural product price scissors policy implementing for a long time, the expansion of urban-rural income disparity has become inevitable. Although the Nation has implemented the Household Contract Responsibility System,supporting and benefiting agriculture policies which is in favor of the development of rural economy, the urban-rural income disparity appears short narrow, but due to the GDP growth oriented performance evaluation, Local governments are more inclined to implement distinctly urban-biased fiscal, financial and economic policies, which encourage the amplification of urban-rural income disparity. Theoretical models and empirical researches provide the theoretical and practical basis for the path selection of reducing the urban-rural income disparity. Changing the performance evaluation methods, reforming the Household Registration System and speeding up the rural education development are the effective ways to reducing the urban-rural income disparity.