How Does Foreign Trade Affect The Urban-Rural Income Gap In China?

The corona-virus pandemic has not yet ended.In this severe and complex environment,it is an inevitable choice for China to adhere to the development of foreign trade and high-quality opening up.However,while foreign trade drives China’s economic development,it will also have an impact on the domestic income distribution pattern.How to optimize the domestic income distribution mechanism and improve the income gap between residents is an urgent task for China at the current stage.This paper explores how trade affects the urban-rural income gap based on the dual roles of domestic and foreign markets.The empirical part selects relevant research data from 31 provinces(municipalities and autonomous regions)in China from 2011 to 2020 to construct a two-way fixed effect model.At the same time,the benchmark regression analysis was carried out to expand the analysis of regional heterogeneity and data comparison before and after the epidemic;secondly,the innovative introduction of import and export trade in the empirical research was related to the digital economy development index,industrial structure,technological progress,urbanization,etc.of each province.finally,the robustness test of the benchmark regression results in this paper is carried out.The results show that:first,after controlling for the two-way fixed effects of relevant provinces and years,the higher the level of imports and exports in a province,the smaller the income gap between urban and rural areas;at the same time,this effect also has regional heterogeneity and will Affected by the epidemic,the role of import and export trade in reducing the income gap of residents is greater in coastal areas than in inland areas.The significant improvement effect of trade on income gap before the epidemic is no longer significant after the epidemic;The effect will vary due to changes in related interactive variables such as the development level of the digital economy,industrial structure,and technological progress in each province.Finally,the test results of lagging the explanatory variable by one period and replacing the explained variable with the Theil index are all significant,which proves the robustness of the conclusions of this study.This paper is not only a summary of relevant research,but also an exploration of new research ideas;it aims to investigate the realistic impact of trade on China’s urban-rural income gap under the current national conditions,and to provide timely suggestions for solving the problem of China’s urban-rural income gap.