The Study Of Sichuan Province Public Expenditure Impact On Urban-rural Income Gap

China’s economic development level has increased rapidly since reform and opening-up. However,the urban-rural income gap has been widening. Just like the national consensus, Sichuan Province is also facing the dilemma of the urban-rural income gap widening while the urban and rural income levels both rose sharply. The difference between the urban and rural income is 1.5 to 2 times than what the domestic and foreign economists estimated. The Widening income gap between urban and rural not only affects the quality of economic development, but also undermine social harmony and stability. However, considering the present urban-rural income gap, financial means, instead of market forces, is a good way to reduce the income gap between urban and rural areas. Research on fiscal expenditure has important and practical significance on the effect of reducing the urban-rural income gap when tax policy has been found futile to solve the problem.Based on analysis of the current situation of income gap between urban and rural areas of Sichuan Province, this paper explores the influence of fiscal expenditure scale and structure on income gap between urban and rural areas of Sichuan Province by analyzing a panel data from year 2002-2012 of 21 cities in Sichuan Province. At last, the paper draws the following conclusions:(1) the income gap between urban and rural areas in Sichuan Province is below national average level, but this gap in the northeast area and the two cities of Aba and Ganzi is very big, which has dramastic influence on data of whole Sichuan province;(2) To Sichuan Province, the scale of fiscal expenditure and urbanization can effectively narrow the income gap between urban and rural areas, while the change of industrial structure expands the income gap between urban and rural areas;(3) To Sichuan Province, the infrastructure expenditure and social security expenditure can effectively narrow the income gap between urban and rural areas while expenditure in agriculture, science, education, culture and sanitation expands the income gap between urban and rural areas. The administrative expenditure restrains the expenditure on people’s livelihood, but its impact on the urban-rural income gap is not obvious.Through empirical analysis, this paper proposes policy and recommendation to narrow the urban-rural income gap of Sichuan province:(1) establishing a scientific and rational expenditure system and increasing capital construction, agriculture and social security expenditures; meanwhile increasing agriculture, science, education and social security spending in rural areas and ethnic minority areas;(2)accelerating the integration of urban and rural areas and enchancing industrial upgrading and industrial transfer, and improving the quality of urbanization, eliminating discrimination on residency status.