Abstract
This study applies wavelet analysis to examine the relationship between the urbanization and the urban–rural income gap in 31 provinces in China over the period 1978–2019. We find three patterns of causality between urbanization and the urban–rural income gap. Empirical results show that urbanization does Granger-cause an urban–rural income gap, the urban–rural income gap does Granger-cause urbanization, and there exists a two-way causality between the urban–rural income gap and urbanization. Furthermore, these relationships mainly exist at high frequencies (short term). The results obtained by considering the resident population are more significant than those by the registered population. These results could help local governments develop fair policies for urban and rural income distribution in the process of urbanization of different provinces, promoting the coordinated development between urban and rural areas.
Highlights
Urbanization has made a great contribution to China’s economic development in the past 40 years, and has affected the relationship between urban and rural development
In consideration of the large differences in economic development between different provinces in China and the two different urbanization patterns of resident population and household registration in the urbanization process, we collected the following types of data for 1978 to 2019 for more than 31 regions in China: incomes of urban and rural residents, the urbanization rate calculated based on resident population, and the urbanization rate calculated based on household registration
Using continuous wavelet coherency analysis, this paper examined the relationship between urbanization and the urban–rural income gap in China from 1978 to 2014
Summary
Urbanization has made a great contribution to China’s economic development in the past 40 years, and has affected the relationship between urban and rural development. The ratio of per-capita consumption of urban residents to that of rural residents increased from 2.54 in 1978 to 3.35 in 2003 and slowly decreased to 2.11 in 2019 This development gap causes an imbalance between urban and rural areas, which becomes the source of many social problems and has led scholars to focus on the relationship between urbanization and the urban–rural income gap. In the middle stages of urbanization (i.e., an urbanization degree between 40 and 70%), the effect of cities on their surrounding regions gradually changes from polarization to diffusion, and the urban–rural development gap narrows. The traditional measurement method can only grasp the relationship of linear invariance, but it is difficult to grasp the relationship with time and region change Given this view, we focus on the provincial level and examine the historical development and present characteristics of the relationship between urbanization and urban–rural development in various regions of China by a continuous wavelet coherency analysis. In addition to observing the phases of urbanization integration, our study uses wavelet coherence with a rolling window to evaluate the multihorizon nature of the changing comovement between urbanization and the urban–rural income gap in the short and long term
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