Endowment Structure, Industrial Structure, and the Fluctuation of Urban-rural Income Gap——An Analysis of New Structural Economics

Abstract

Taking endowment structure as the starting point, this paper examines the determinants of urban-rural income gap fluctuation in China. Firstly, this paper proposes the core hypothesis through theoretical analysis and then proves it with the mathematical model. It shows that economic factors and policy factors jointly determine the fluctuation of endowment structure difference in urban and rural areas, and ultimately determines the fluctuation of the urban-rural income gap by determining the fluctuation of output growth rate. Secondly, this paper uses China's provincial panel data from 2006 to 2019 to empirically test the theoretical model, taking the relative index of urban and rural capital stock as the measure of the difference in endowment structure. The conclusion of this paper shows that the income gap between urban and rural areas is not an overnight result, but a fluctuating process. Policy measures can effectively narrow the urban-rural income gap by narrowing the urban and rural endowment structure gap.