The Influence Of China’s Industrial Structure Evolution To The Urban-rural Income Gap

In recent years, to deal with the problem of “agriculture, rural areas and farmers”,China has made great efforts and fortunately obtained some achievements. The income gap between urban and rural has begun to narrowed. But, it is worth noting that the economic environment in China also is undergoing tremendous changes, with slow speed of economic growth and imminent upgrading of industrial structure. In this case, we will face some new difficulties and challenges to balance urban and rural.The study of that how industrial structure evolution influence the urban-rural income gap, will help us to seek more efficient measures to keep the diminishing trend of income gap.At first, this paper theoretically analyzes the mutual mechanism of the industrial structure evolution and the urban-rural income gap. The change of industrial structure mainly use the elements flow, the technological effect and employment as the channel,to indirectly influence the urban-rural income gap. In turn, income gap through driving the change of consumer demand and factor supply structure, affect the process of industrial structure. The mechanism is complicated and the process needs time, so that the relationship between the two variables in the long-term performance is more obvious. Further the industrial structure evolution divided into the sophistication and the rationalization, the two dimensions both have a role in reducing the income gap.At the beginning of the adjustment, the industrial structure usually has an irrational development, therefore it is difficult to expect the specific effect in the short time. But the long-term development of China’s industrial structure performance optimization on the overall, so it is beneficial to narrow the income gap in the long time.Then, this paper based on the panel data of 30 provinces and cities in 1992-2014,makes a test of Granger causality relationship with the three variables, and measures the impact of the urban-rural income gap to the the change of the sophistication and the rationalization through PVAR model. The empirical results show that both of the two factors have a positive impact on closing the income gap, and the sophistication plays a more prominent role than the rationalization as time goes on. These results once again prove there is no contradiction between the adjustment of the industrial structure and the income gap, as long as the government can reasonably regulating the industrial layout. For this, some policy suggestions mainly from various angles are put forward in this paper to keep the gap shrinking, such as, the development of agricultural modernization, the reasonable layout of the second and third industry and the improvement of the quality in urbanization.In brief, both the industrial structure evolution and the urban-rural income gap are very important factors related to the healthy development of the economy and the stability of the social. It is of great significance to have a further study and deeper understanding in the relationship between them.