Analysis on the Effect of the Targeted Poverty Alleviation Policy on Narrowing the Urban-Rural Income Gap: An Empirical Test Based on 124 Counties in Yunnan Province

Abstract

China’s targeted poverty-alleviation policy has eliminated absolute poverty and become the focus of world attention. However, a relative-poverty problem still exists in China, and the large urban–rural income gap is an important issue. Whether the implementation of the targeted poverty-alleviation policy has narrowed the urban–rural income gap, along with its specific effects, requires an accurate analysis, which is particularly critical in order for China to implement a rural-revitalization strategy and further eliminate relative poverty in the future. Given the problems and shortcomings of the existing studies, such as not passing the parallel trend test to overestimate the policy effect, in this study we refer to the previous results, and our analyses divide the 124 counties in Yunnan province into four categories: non-poverty counties and counties with grade-I, grade-II, and grade-III poverty. We selected the panel data of the urban–rural income ratio of each county along with eight influencing factors from 2011 to 2020 for difference-in-difference model (DID) analysis. In this study, we compare the four types of counties level-by-level, and we construct a full-sample spatial DID model. The estimated results, after excluding the impact of COVID-2019, are significant. In addition, we perform robustness and placebo tests and other work on the DID model. All of the results show that the implementation of the targeted poverty-alleviation policy has effectively reduced the urban–rural income ratio in areas experiencing poverty. Finally, we use the intermediary effect analysis method to explore the reasons for the findings: driven by the targeted poverty-alleviation policy, the financial investment in poor areas has substantially increased, further increasing the income level of rural residents in poor areas and thus promoting a notable reduction in the income gap between urban and rural residents in poor areas. We suggest that, although China has achieved comprehensive success in targeted poverty-alleviation, assistance investment still needs to be increased, policies must be adjusted, and income growth must be accelerated to achieve industrial prosperity.