Research On The Influence Of Fiscal Imbalance On Urban-rural Income Gap

The urban and rural income gap has always been the focus of the Party and the state.In 2020,the Fifth plenary session of the 19 th CPC Central Committee pointed out that "the problem of unbalanced and inadequate development still exists,and there is a large gap between urban and rural development and regional income distribution".The report to the Party’s 20 th National Congress in 2022 once again stressed that "development between urban and rural areas and between regions and the distribution of income gap remain large".Therefore,how to narrow the income gap between urban and rural areas and form a new pattern of coordinated development between urban and rural areas is the main task of the "post-epidemic era",and finance,as the main means of income distribution and redistribution,is bound to play a crucial role in the process of government adjustment of the income gap between urban and rural areas.On the basis of existing studies and based on the data of 30 provinces,municipalities and autonomous regions from 2006 to 2019,this paper selects an appropriate quantitative method to reasonably quantify vertical fiscal imbalance,horizontal fiscal imbalance and urban-rural income gap.Vertical fiscal imbalance and horizontal fiscal imbalance are the core explanatory variables,and urban-rural income gap is the explained variable.By constructing panel simultaneous equation model,using three-stage least square method to estimate the effect and form of financial imbalance on urban-rural income gap.The empirical study found that: first,from the national level,the fiscal vertical imbalance will widen the urban-rural income gap.If the local fiscal pressure is taken into account,the vertical fiscal imbalance has different effects.When the local financial pressure is small,the fiscal vertical imbalance will still widen the urban-rural income gap.When the local financial pressure is large,the vertical fiscal imbalance will narrow the urban-rural income gap.Second,the direct effect of horizontal fiscal imbalance Narrows the urban-rural income gap nationwide or in regions with different fiscal pressures,while the indirect effect of horizontal fiscal imbalance widens the vertical fiscal imbalance at the 1% significance level no matter in the country or in different regions.The impact of horizontal fiscal imbalance on the urban-rural income gap also depends on the size of fiscal pressure,that is,in areas with high fiscal pressure,the central government has stronger macro-control ability,and the positive effect is greater than the negative effect caused by fiscal pressure.However,in areas with little financial pressure,the positive effect of central macro-control is weakened,but it can still narrow the urban-rural income gap.Thirdly,in the mechanism test,the vertical imbalance widens the urban-rural income gap in areas with little financial pressure and Narrows the gap in areas with great financial pressure by restraining residents’ income.The horizontal imbalance in areas with high financial pressure will suppress residents’ income,and increase residents’ income in areas with low financial pressure,although the effects of different ways,but can narrow the urban-rural income gap;The fiscal imbalance affects the income gap between urban and rural areas by first changing the proportion of local government’s natural expenditure,but the vertical fiscal imbalance and the horizontal fiscal imbalance have different influence directions.The vertical fiscal imbalance will reduce the proportion of natural expenditure,and thus widen the income gap between urban and rural areas.The higher the degree of horizontal fiscal imbalance and the more abundant the own financial resources,the larger the proportion of natural expenditure,thus narrowing the urban-rural income gap.Based on empirical results and regional development status,this paper puts forward the following suggestions: first,improve the efficiency of vertical transfer payment,strengthen the supervision of transfer payment funds,and fully implement the budget performance evaluation of transfer payment funds,so that "spending must be efficient,ineffective must be held accountable".Second,establish and improve the horizontal transfer payment system.Third,we will create conditions to increase local governments’ own financial resources,encourage them to create new sources of revenue,improve their ability to obtain their own revenue,and allocate more government financial funds to the supply of public services related to people’s livelihood.Fourth,we should improve supporting policies related to transfer payments,further integrate and coordinate related management systems and development funds,and form a scientific and systematic system so as to give full play to the guiding,leveraging and amplifying role of financial funds in narrowing the urban-rural income gap.Fifth,we will stabilize the spending structure of local governments,ensure that spending on people’s livelihood steadily increases,and ensure that spending on people’s livelihood plays a role in ensuring that the income gap between urban and rural areas is narrowed.