An Empirical Study About The Impact Of China’s Industrial Structure Upgradation On Urban Poverty

In the process of modernization, China’s industrial structure has undergone a series of changes. Adjustment of industrial structure is not only beneficial to economic growth and employment increase, but also causes structural unemployment and affects the income distribution. The current study shows that economic growth helps to reduce poverty, unemployment and the deterioration of income distribution are not conducive to poverty reduction. Researching the effect mechanism of China’s industrial structure upgradation on poverty alleviation will help us in not only realizing the dynamic effects of industrial structure upgradation on urban poverty, but also formulating and adjusting macroeconomic policies to achieve the purpose of effectively combating poverty. In the future, how to coordinate the relationship between the upgradation of industrial structure and urban poverty alleviation will be undoubtedly a subject with very practical significance.In this paper, the author analyzed empirically the relationship between the upgradation of industrial structure and urban poverty alleviation with the methods of Granger causality tests, cointegration, VAR models, impulse response functions, variance decomposition, vector error correction model, based the data from "China Statistical Yearbook" and the household survey about the income and expenditure since1985. The results of empirical analysis show that the upgradation of the industrial structure is the Granger cause of the breadth, the depth and the intensity of poverty. Upgradation of industrial structure in the short term leads to the rise in the breadth of poverty, and deteriorates the depth of poverty, but decreases the intensity of poverty. In the long term, upgradation of industrial structure is conducive to urban poverty reduction. In long term, the increase of proportion of primary industry in GDP will reduce the breadth, depth and intensity of poverty. Secondary and tertiary industries have the similar effects on urban poverty. Among them, the effect of tertiary industry is the strongest, and the effect of primary industry is the weakest. On one hand, upgradation of industrial structure changes the structure of employment by changing the composition of the workforce among and within the industrial sectors, leading to changes in income of urban residents. On the other hand, the upgradation of the industrial structure has general benefit to urban residents by stimulating economic growth. Despite the expansion of income gap, the combined result is that the industrial structure upgradation reduces urban poverty effectively.This paper analyzed the effect mechanism between upgradation of industrial structure and urban poverty in short and long terms, according to the effects of growth, employment and distribution. Undoubtedly, it has an important inspiration for understanding the practical reasons of the changes of the urban poverty and finding policies and measures to reduce poverty on the basis of research.