Research On The Impact Of Fiscal Decentralization On The Income Gap Of Urban And Rural Residents

With the continuous reform of China’s economic development and financial system,China’s fiscal revenue has increased year by year,and the financial system has been continuously improved,but the problem of mismatch between financial power and power has not yet been solved.Local governments,especially grassroots governments,have great financial pressure,affected by growth-type incentives,local government expenditure structure is often in a distorted state,relevant fiscal expenditures and preferential policies are concentrated in cities and ignore rural areas,so that rural development loses vitality,resulting in dysfunctional urban and rural development,which in turn leads to the widening of regional income inequalities.The excessive income inequality in urban and rural areas not only hinders economic growth,but also poses hidden dangers to social stability,which is not conducive to the long-term stability of society.Therefore,in this context,it is necessary to study the relationship between fiscal decentralization and the income gap between urban and rural residents in China.Based on the existing research at home and abroad,this paper analyzes the mechanism of fiscal decentralization policy on the income gap between urban and rural residents from two aspects: fiscal revenue decentralization and fiscal expenditure decentralization.Then,the current situation of fiscal decentralization and the income gap between urban and rural residents in China is summarized,and the fixed-effect model,regulatory effect model and threshold effect model are constructed to empirically analyze the specific effects of fiscal decentralization by taking the provincial panel data from 2007 to 2020 as samples.The results of the study show that the regression coefficients of the two fiscal decentralization indicators selected in this paper are significantly negative,indicating that fiscal decentralization can reduce the income gap between urban and rural residents.By region,whether it is the decentralization of fiscal revenue or fiscal expenditure,the effect in the eastern region is higher than that in the central and western regions.Taking industrial structure as the regulating variable and threshold variable,the results show that industrial structure is a useful supplement to fiscal decentralization,and the effect of fiscal decentralization on narrowing the income inequality in urban and rural areas at a low level of industrial structure is weaker than that at a high level of industrial structure.Finally,based on the aforementioned theoretical and empirical research results,we aim to improve the degree of fiscal decentralization and reasonably allocate fiscal revenue and expenditure responsibilities;Promote coordinated regional development and balance fiscal decentralization;Improve the performance evaluation mechanism of local governments and build a service-oriented government;Optimize the transfer payment system and improve the utilization rate of financial funds;Propose policy recommendations in five aspects: promoting the upgrading of urban and rural industrial structure,and assisting in maximizing the effectiveness of fiscal decentralization.