Empiric Alanalysis Of Relationship Between Growth And Urban-rural Chinese Income Gap

With rapid development of Chinese economy, China has been emerged as the second largest economy since the reform and opening-up. However, at the same time, the widening gap in income distribution has become an important issue affecting the healthy development of Chinese national economy.In this article, firstly, we analyze the relationship between economic growth and urban-rural Chinese income gap in1978-2012. We choose GDP per capita and urban-rural absolute income gap as two variables. With the data from1978to2012, we test Kuznet’s ’inverted U’hypothesis in both different years and different areas.In the empirical analysis, we analyze the relationship between economic growth and urban-rural Chinese income gap with the unit root test, cointegration test and Granger causality test. Subsequently, we divide China into three parts, that is eastern, central and western, and analyze panel data for each of the three parts with cointegration test and varying parameter model sonely on the impact of economic growth on urban-rural Chinese income gap.The main conclusions drawn in the article:(1) The relationship between economic growth and urban-rural Chinese income gap shows a characteristic "inverted U-shaped" curve, and states in the left side of the "inverted U" curve without reaching an inflection point.(2) The relationship between economic growth and the gap in eastern, central, western areas also shows a characteristic "inverted U-shaped" curve, but does not reach the "the improvement" inflection point.(3) Economic growth and urban-rural Chinese income gap is mutually Granger.(4) With the rapid economic growth of eastern, central and western areas, urban-rural Chinese income gap will gradually increase. In the transverse direction, the overall economic development of the eastern region is better than the development in the western region, while its urban-rural Chinese income gap is far greater than the gap in the western region.