Has highway construction narrowed the urban–rural income gap? Evidence from Chinese cities

Using 2003–2016 panel data of 278 prefecture†level Chinese cities, we analysed the relationship between highway construction, resource flow, and urban–rural income gap using multiple spatial econometric models. Overall highway construction has narrowed the urban–rural income gap owing to better population mobility and goods flow. However, while goods flow has narrowed the gap, population mobility has aggravated it. A regional difference in the impact of highway construction also exists, that is, the effect is negative in central and western cities, but positive for eastern cities. Moreover, China's “4 trillion†fiscal and currency stimulus plan has strengthened highway construction in narrowing the income gap.