Analysis On How Local Public Spending Affects The Urban-rural Income Gap

The Urban-rural income gap problem is one of the enduring research topics in income distribution area. Since Reform and Opening, China's economy has maintained sustained and rapid growth, but at the same time accompanied by a growing urban-rural income gap, it has also become a urgent problem to the formation of a harmonious society in China.China's current urban-rural income gap growing problem caused great concern in the community, and the Government is also committed to solve rural issues, narrowing the gap to improve people's livelihood. So based on the reality of our current economic situation, urban-rural income gap on this issue in-depth study is of great significance.In theory, local government spending can affect the Urban-rural income gap, which can largely reflect the tendency of local government's policies. All expenditures will differently affect the opportunity and the ability to earn income of the urban residents and rural residents. These expenditures can affect the income of urban and rural residents, so it also can influence the Urban-rural income gap. Local government expenditure policy, which the government can directly control, is very easy to operate. Find the intrinsic link between local financial expenditure and the Urban-rural income gap can help the government choose the appropriate structure of financial expenditure, to narrow the urban-rural income gap.In the basis of the background and ideas above, this paper presented the background and significance of the research at first, then reviewed the existing research on rural-urban income gap from the perspective of government expenditure, and then used various indicators described Status of urban-rural income gap in China in detail, and then analyzed how China's Government expenditure on agricultures, expenditure on education and expenditure on social security spending affect the urban-rural income gap from the theoretical, and then proceeded with the corresponding empirical analysis, and finally wrote the study conclusions and made my policy recommendations.In this paper, the main conclusions are as follows:First, China's current urban-rural income gap has been more serious, should be given high priority; Secondly, the lower income levels of rural residents, rather than high level of income of urban residents are the main aspects of the problem of income gap between urban and rural residents; Third, our government expenditure on agriculture, expenditure on education and expenditure on social security spending will affect the income gap between urban and rural areas, on the one hand by the tilt of government spending policies, on the other hand through the different marginal revenue between urban and rural areas. Fourth, our government expenditure on agriculture can increase the income of farners, and significantly decreased the Urban-rural income gap. Fifth, our government expenditure on education brings the expansion of the urban-rural income gap. Sixth, China's government increased spending for social security have significant wide the income gap between urban and rural areas.For the conclusion of the study, this paper proposes the following policy recommendations:First, for specific investments in public expenditure in agriculture, such as agriculture spending, on the one hand the government should increase investment in the aggregate, on the other hand should adjust its expenditure structure and improve the investment Effect to improve the efficiency of its expenditures, and also should improve the agriculture regulatory to increase the effect; Second, education spending, on the other hand the government should increase the coverage of basic education, on the other hand the government should change the existing urban tilting policies and increase the educational opportunities for rural residents; third, the government should realize the urban social security integration, eliminate the social security gap between urban and rural areas, so that the spending for social security can play a constructive role in revenue regulation.