Analysis of Income Urban-Rural Gap of Guizhou Province in the Condition of Dualization

Article excerpt

INTRODUCTION

Since the implementation of reform and opening policy in China, China's economy has developed in all aspects. Due to the urban-rural dual structure of the economy, the gaps of urban-rural income, labor productivity, living standard, education and public service is widening, which contribute to the current unbalanced economy(Yan-ping, 2009). The urban-rural income gap of Guizhou province is larger than the national average level, and shows sign of widening. In 1978, the ratio of urban-rural income is 2.39:1, and 3.12:1 in 1982. Since 1983, the urban-rural income gap of Guizhou province widened and amounted to 4.06:1 in 1994. And since 1997, it continued widening and amounted to 4.5:1. The widening tendency should not be ignored(LuLu, Qindong, 2009).

Many factors are ascribed to the causation of the income gap between urban and rural residents. It's learned from the laws of social and economic development and the industrialization history of various countries in the world that the existence of urban-rural gap is a common phenomenon. In recent years, regarding to the impact of urban-rural income gap, some of them view the dual structure as the chief factor of fluctuating the urban-rural income gap for the labor flow between urban and rural areas, is greatly throttled by the dual structure (Martin, 2010). Some predecessors, studying the international cross-sectional data to analyze the relativity between urban-rural income gap and economic growth, found that the income gap has always negative impact upon economic growth. Lu Ming and other Chinese scholars have done research, utilizing simultaneous equation models and distributed lag models, also found the negative impact of income gap upon economic growth. Nevertheless, Wang Tongsan and Cai Yaozhou, using cointegration theory and application of standard Granger causality test, found that the widening urban-rural income gap leads to a tendency towards reinvestment structure thus to increase the economic growth rate (Cao, Chen). Therefore, regarding to the impact of urban-rural income gap, the applied different indicators, or analytical approach or perspective in research will positively come to different conclusion. How should the urban-rural income gap of Guizhou province be measured And what are the major factors that are attributed to it. Answering these questions are the motivations of this paper. Therefore, this paper is to analyze the impact of urban-rural income gap of Guizhou province by measuring the urban-rural income gap via principal component and regression analysis and, analyzing the impact of dualization of Guizhou province and, building the regression model of urban-rural income gap and do cointegration tests which will be later estimated.

1.DATA SOURCES AND VARIABLE SELECTION

1.1 Description of data sources

Thia raw data is collected from the "60 years in Guizhou Statistical Information" and the "Guizhou Statistical Yearbook from 1995-2009".

1.2 Variable Selection

1.2.1 The Choice of Dependent Variable

Major measure indicators of the income gap between urban and rural residents are the Gini coefficient, the absolute gap between urban and rural income and urbanrural income ratio. View of the urban-rural income ratio has simple and intuitive, the data for accuracy, high degree of social recognition, we use the urban-rural income gap between urban-rural income ratio as a measure of the indicators, which uses disposable income of urban residents and rural per capita net income as a measure of the ratio of urban and rural areas indicator of income disparity.

1.2.2 Choice of Variables and Data Acquisition

According to the theoretical analysis, the factors that cause income gap between urban and rural areas of Guizhou Province are various, but can be broadly grouped into two categories, which are the impact of development and strengthening dualization. This paper focuses on impact of dual factors upon urban-rural income gap, which are directly reflected by the economic factors and indirectly reflected by the political and systematic factor. …

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