Rural roads and consumption: empirical evidence from China

Abstract

ABSTRACT Inconvenient transportation limits the expansion of the rural consumer market, further widening the consumption gap between urban and rural areas in China. To examine the impact of rural road construction on rural consumption, we derive two-sector overlapping generations model and use city-level panel data for rural China from 2010 to 2019 by empirical analysis. The findings show that the construction of rural roads has not only achieved an increase in the level of consumption expenditure of rural residents, but also promoted the transformation and upgrading of the consumption structure in rural areas.