Abstract
Based on provincial panel data of China ranging from 2004 to 2015, this paper has empirically examined the effect of basic public service on the urban–rural income inequality with a system generalised method of moments (sys-GMM). We arrive at the following conclusions: 1) the improvement of public service provision is conducive to narrowing the urban–rural income gap; 2) compared with the ‘hard’ public services (including infrastructure, environmental protection and cultural facilities), the ‘soft’ public services (including education, medical care and social security) play a more significant role in reducing the disparity; 3) the household registration system impairs the welfare brought by the ‘soft’ public services and exacerbates the passive effect of ‘hard’ public services on the income gap; 4) the interactive impact of household registration regulation and public service provision on the income gap is more significant in developed areas. These findings suggest the government should give priority to the improvement of ‘soft’ public services, reevaluate the way of spending on ‘hard’ public services in rural areas and deepen the household registration system reform.
Highlights
In many developing countries, the imbalance between urban areas and rural areas is a major concern (Kibriya, Bessler, & Price, 2019; Ravallion & Chen, 2007)
Play a more significant role in reducing the disparity; 3) the household registration system impairs the welfare brought by the ‘soft’ public services and exacerbates the passive effect of ‘hard’ public services on the income gap; 4) the interactive impact of household registration regulation and public service provision on the income gap is more significant in developed areas
Based on provincial panel data from the China Statistical Yearbook of 2004–2015, this paper estimated the effect of basic public service provision on the urban-rural income gap in China
Summary
The imbalance between urban areas and rural areas is a major concern (Kibriya, Bessler, & Price, 2019; Ravallion & Chen, 2007). Zhou and Zhao (2019) argue that education demonstrates an inverse U-shaped trend in its contribution to income inequality in China with a counterfactual estimation Another kind of public services widely studied in the discussion of income inequality is social insurance coverage. We include the two key influential variables, household registration system and public services provision in the same analysis framework to discuss urban-rural income inequality. Compared with the majority of studies on household registration regulation, we contribute to the literature by examining how the interaction of household registration regulation and public services shapes the urban-rural income inequality theoretically and empirically.
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