A Study On The Income Gap Between Urban And Rural Areas From The Perspective Of Population Production Preference

Rural and urban income gap is an important part of the total resident income gap which has a profound significance. Firstly, the enlarging income gap between rural and urban sectors has rooted the dual-economy of the country, which hinders the urbanization process and coordinated development of urban and rural sectors. Secondly, the enlarging rural and urban income gap arises the psychology imbalance of the lower income population which could become the potentially social unrest factor. From1980s to2012, China’s urban and rural income gap has risen from1.8to3.1. The constantly rising income gap between urban residents’ disposable income and rural residents’net income attracts more and more attention.Many researchers have tried to find out the root reason which leads to the constantly rising urban and rural income gap. Some tried to explain from the aspect of the difference in production efficiency between agricultural and industrial production; some tried to explain from the aspect of the development strategy which is in favor of industry and they believed that price scissors have concentrated resources on urban which limit the development of rural sector; some tried to explain from the aspect of household registration system policy which limits the free movement of laborers. Most of the scholars tried to explain the reason of income gap from an exogenous variable which is the main factor that leads to the enlarging income gap. They have not looked deeply into the inner mechanism that leads to income gap. Few of them have tried to explain the income gap from the view of endogenous variable and most of the analysis of income gap is constrained by the endogenous variables and the inner systematic analysis of income gap is deficient.Unlike most of the present research papers, this paper has managed to find out the root reason from the inner two sectors that contributes to the enlarging income gap. Regardless of the exogenous variables that used by the former researchers, this paper has tried to explain the income gap from the difference preference in population production between two sectors. The urban sector families tend to procreate few quantity high quality children; while the rural sector families tend to procreate more quantity low quality children. Via the research of difference in the way of population production between two sectors, this paper has discovered that it is the difference in population production preference that leads to the enlarging income gap. The families in urban sector tend give birth to few high quality children. So they have the strong quality preference and this also helps them to keep the fertility rate at a constantly low level. On the contrary, families in the rural sector tend to give girth to more quantity children. So they have the strong quantity preference and this makes the fertility rate at a high level. It is the difference in population production preference between two sectors that leads the urban sector’into the status of high human capital level, low fertility level, accompanying with the quickly constant income growth and the rural sector into the status of low human capital, high fertility level, trapping into the tar pits of slowly income growth.The structure of this paper can be divided into six parts. The first part is introduction. This part introduces the problem of income gap. The research meaning of this problem and the related conception in this paper are also included in this part. The second part is literature review. This part contains the research work of foreign and domesticated scholars. In the end of this part, a comparison is made between the previous research work and this paper. The third part is the comparison of population production preference transition between urban sector and rural sector. The data that needed are from Chinese General Social Survey, and the data are divided into rural and urban families by generation and sector. Also, the construction of Population Production Preference Transition Ration is also completed in this part. The forth part is the theoretical analysis. In this part, under the help of human capital theory and fertility theory, the inner mechanism of Population Production Preference Transient Ratio that affects the income gap between urban and rural sector is built in this part. The fifth part is statistical test and econometric empirical analysis. Econometric software is used in this part to complete the econometrical analysis work which can be used to test validity the previous theoretical analysis. The final part is the sixth part. In this part, conclusion and policy suggestion are made in the final part.The creative point of this paper is that by the combination of variables which represent human capital and fertility rate, a new variable is built which can be used to describe preference of population production transition in urban and rural sectors, namely Population Production Preference Transition Ratio. Unlike the previous research work which has tried to find out the reason that leads to rural and urban income gap from the view of exogenous variables, under the help of Population Production Preference Transition Ratio, this paper has tried to look deeply into the inner part of urban and rural sector to find out the root reason that causes the income gap problem. The conclusion of this paper is that Population Production Preference Transition Ratio can be used to explain the inner mechanism of income gap and the root cause that leads to the income gap become larger and larger is the difference in Population Production Preference Transition Ratio between urban sector and urban sector.