Research On The Impact Of Fiscal Decentralization On Urban-rural Income Gap

Since the reform and opening up,China has developed rapidly,which also leads to uncoordinated development in China at the same time,generating the large income gap,so reducing the urban and rural income gap within the county area is one of the significant tasks currently.Finance is the foundation and an important pillar of state governance and a material guarantee for promoting social equity and improving people’s lives.Zhejiang Province has achieved good results in solving the problem of uncoordinated development,and its financial system has played a vital role.In combination with the fiscal decentralization form of the "county directly under the provincial government" in Zhejiang Province,this paper discusses the impact of fiscal decentralization in the form of the "direct provincial supervision of county finance" on the urban-rural income gap by combing relevant policy documents and theories,combined with empirical analysis,and explores how Zhejiang Province can improve the county economy financially and narrow the urban-rural income gap,so as to provide reference schemes for other provinces.The main conclusions of this paper are as follows:Firstly,the degree of fiscal decentralization from the perspective of income and expenditure in Zhejiang Province is constantly improving.The per capita fiscal revenue and expenditure are also continually growing,and the urban-rural income gap is continuously narrowing.From the ranking of urban-rural income gap and fiscal decentralization,it is found that there may be a positive correlation between urban-rural income gap and the two,that is,the higher the degree of fiscal revenue decentralization or fiscal expenditure decentralization,the smaller the urban-rural income gap,which provides a hypothesis basis for this study.Secondly,through a total of 360 sample data from 45 counties in Zhejiang Province from 2012 to 2019,the empirical findings show that the improvement of fiscal decentralization,whether from the perspective of income or expenditure,can effectively narrow the urban-rural income gap,and the income perspective has a greater impact.It is proved that the decentralization of fiscal power and administrative power through the "county directly under the provincial government" in Zhejiang Province has an obvious narrowing effect on the urban-rural income gap in Zhejiang Province.In addition,the average financial income and the average financial expenditure also show that they can play a role in narrowing the urban-rural income gap.It is not only necessary to increase the share of financial resources,but also to make the pie of total financial resources bigger,so as to better narrow the urban-rural income gap.In the empirical results,the influence of other factors on the urban-rural income gap is also verified.The average GDP,the total power of agricultural machinery and the participant rate of pension insurance can narrow the urban-rural income gap,while the proportion of industry,export,the number of legal entity per10,000 people and the number of doctors per 10,000 people can widen the urban-rural income gap.In addition,in the empirical analysis of fiscal decentralization from the perspectives of income and expenditure,the impact of the percentage of financial education on the urban-rural income gap is not significant,only in the financial self-sufficiency rate,it will expand the urban-rural income gap.Thirdly,some possible problems existing in Zhejiang are as follows.First,the reform of the "direct provincial supervision of county finance" in Zhejiang Province can effectively narrow the income gap between urban and rural areas.However,the revenue base in urban areas is large,although its growth rate is slow,it still out pace that of rural areas in absolute terms.This is true in Zhejiang Province,which has the smallest income gap between urban and rural areas,and the situation will be more serious in other provinces.Second,the high proportion of industry and the large number of enterprises with small scale restricts the current economic development.The competition of county-level governments activates the private economy,but the private economy mainly focuses on maximizing its own interests,which damages the overall interests to a certain extent.Moreover,in the current rapid development of the national economy,it is far from enough to rely on the development of county-level private economy.Third,major basic public service resources are still mainly distributed in cities.For example,in the integration of medical resources in Zhejiang Province,small local hospitals are merged into large hospitals.Although relevant services will be provided to counties and townships,the core part is still in cities.This is the same with education,which,under the urban-rural duality structure,will cause more rural residents to migrate to cities,being harmful to the rural development.In summary,the fiscal decentralization of the "county directly under the provincial government" in Zhejiang Province has effectively narrowed the urban-rural income gap.The reason why Zhejiang Province is highlighted here is that whether fiscal decentralization can narrow the urban-rural income gap is different in the samples of different regions and different times.For this reason,the reform plan of the "direct provincial supervision of county finance" in Zhejiang Province is more worthy of reference for other provinces.Zhejiang Province has achieved good results in narrowing the urban-rural income gap,but only the nationwide urban-rural income gap has been effectively narrowed,can be more conducive to the overall coordinated development.