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Relationship between Urban-Rural Income Gap and Urbanization#br#
Zhang Yaojun, Chai Duoduo
Population Research
2018, 42 (6):
61-73.
Population urbanization and urban-rural income gap affect each other. Based on prefecture-level data of urbanization rate and urban-rural income ratio in mainland China, we examine this mutual impact by conducting three econometric models, including ordinary multiple linear regression (OLS), simultaneous equation model (SEM) and spatial simultaneous equation model (SSEM). We suggest that spatial simultaneous equation model (SSEM) should be used because of the simultaneity and spatial autocorrelation between urbanization rate and urban-rural income gap. The regression results show that the urbanrural income ratio decreases when the local and surrounding areas are more urbanized. And high urban-rural income ratios in surrounding areas inhibit the urbanization process in the local area. Moreover, economic development and the promotion of human capital contribute to higher urbanization level and lower urban-rural income ratio. Based on these results, policy implications are discussed on how to narrow the urban-rural income gap at the broad spatial level and to increase human capital through educational development.
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