The Analysis Of Urban-rural Income Gap And Test Of Influencing Factors

From 1978 to 2008, China's gross domestic product (GDP) expanded rapidly, which had increased nearly 80 times. Nearly 70% of the global achievement of poverty reduction over the past 30 years attributed to China. During the merely 30 years from the reform and opening up policy in 1978 to the present, China's GDP has increased over six times, rural income per capita has increased five times from the 133.6 yuan to 4,761 yuan, urban income per capita also increased five times from 316 yuan to 15,781 yuan. Meanwhile, China's income gap expands continually. China's income gap between urban and rural residents was 182.4 yuan in 1978, but in 2008 that number expanded to 11,020 yuan, which has increased nearly 60 times. In the ranking of the major countries'Gini Coefficient released by the United Nations in 2007, China has reached 46.9, ranked No. 93, which has the largest gap between rich and poor in Asian countries. The growing of the urban-rural income gap has become a heat problem that our government and society have to concern about.This paper first reviews the major relevant domestic and international research literature on the urban-rural income gap over the years. Foreign scholars mainly study on the relationship between the economic growth and income disparity from the macro level. The most representative is Kuznets's"inverted U curve"theory. The later abroad studies are mainly around this theory. While domestic research the urban-rural income gap mainly from the microscopic point of view by the various factors affecting the research. Through the narration and contrast of many income inequality methods according to the unequal axiomatic principles, this paper uses the Theil index as the measurement indicator of the income gap between urban and rural residents. First, making an empirical analysis and commends of China's income gap between urban and rural change since 1978 with time series analysis. Then, this paper does the Granger causality test on the five factors of the income gap between urban and rural residents which has found over the years. These five factors are urban-rural dual economic structure, urban-rural income gap between the hidden, non-agricultural income of farmers, China's urbanization level and the level of economic development. The results of the test showed that the hidden income of urban and rural residents, the level of urbanization, non-agricultural income of rural residents have a significant effect on the income gap between urban and rural residents in a short term, while the level of economic development has a less influence. However, the traditional urban-rural dual economic structure was to make long-term imbalance economic development of urban and rural areas, expanding the income gap between urban and rural residents. At the end of this paper, the author made a number of policy proposals, mainly from transforming urban-rural dual economic structure and increasing the income of rural residents, to narrow the income gap in China.