The Relationship Between The Contribution Of Rural Income Gap And Its Regional Differences

Social networks play a important role in the Chinese society,especially for the income level of rural households when the informal institutions substitute the under-developed formal institutions.Thus,this paper is aiming to figure out the effect of social network to rural households in China via the following two questions:(1) How much does the social network contribute to the income inequality of rural households?(2) How does this contribution vary among the different areas with different levels of marketization?This paper firstly introduce into the most recently literatures which refer to social capital as the capital of the poor.However,this paper argues that it would be somewhat hasty if the return of social network to the rich is higher than that of the poor or the rich own more social network resource than the poor.Thus,this paper firstly comes up with these propositions in order to offer a framework of this paper.The second part of this paper mainly introduces the existed researches in order to find out the contribution of our paper.Firstly,this paper introduces the recent researches on income inequality,especially for the rural households in China. Secondly,the most recent researches on social network have been introduced, especially for those concerning the well-beings of rural households in Chinese society. Also,those focusing on the variation of effects of social network to areas with different levels of marketization have been emphasized in this part.In the end,this paper give a literature review on the methods and approaches of income inequality decomposition,in order to value the different methods and figure out the advantage of the methods used in this paper.In the third part,this paper mainly describe the micro-household data and the marketization index,and introduce the variables of income determination model, especially for the two social network variables which is the most essence of this paper. Also,the statistic information of all the variables is offered in this part.The fourth part of this paper firstly introduce the income determination model and,after running regression,finds that the two social network variables are all positively significant,meaning that social networks can improve the income level of rural households.Then the decomposition based on regression results has been offered and we find the social networks contribute 12.1%-13.4%to the total income inequality,ranking fourth after village dummies,non-agriculture employment and education.Therefore,the decomposition results can well testify our preliminary proposition that social capital is probably the capital of the rich.In the fifth part of this paper,the total data have been grouped into east areas and mid-west areas and been regressed respectively.The results show that the return of social network to eastern households is much higher than that of their mid-west counterparts and is also the case for the contribution of social network.The last part of this paper mainly concludes the most important findings and other interesting findings and also offers a series of questions which is worth of further research for the academia in the future.