Targeted poverty alleviation narrowed China's urban-rural income gap: A theoretical and empirical analysis

Abstract

Between 2013 and 2020, China implemented targeted poverty alleviation (TPA) policy that leads rural socio-economic development to address poverty, and achieved the co-benefits of eliminating absolute poverty and narrowing the urban-rural income gap (URIG). To data, few studies have assessed the impact of TPA on China's URIG. Here, we first constructed the theoretical framework of TPA in narrowing the URIG. Then, based on the panel data of 2081 counties in China from 2013 to 2020, we used the difference in difference (DID) model and spatial Durbin model (SDM) to assess the impact of TPA on China's URIG. Results show that TPA boosted the per capita disposable income of Chinese rural residents by 9.4% and contributed to more than 30% reduction in the county-level URIG. The effect of TPA on narrowing the URIG had a gradient decrease from the east to the middle and west of China, and from mountains to hills and plains, and that in deeply poverty areas was 2.36 times that of the non-deeply areas. TPA reduced the URIG by spatial spillover effects to promote increasing income from rural residents. The direct effect of TPA on increasing the income of rural residents was 1.8 times the indirect effect.