The Non-Linear Impact of Highway Improvements on the Urban–Rural Income Gap in Underdeveloped Regions: A Mixed-Methods Approach

The vast urban–rural income gap (URIG) is a global challenge, particularly severe in underdeveloped regions. While the income-generating effects of transportation improvements are widely accepted, their income distribution effects remain controversial. This study focuses on national poverty-alleviated counties in central and western China, using a mixed-methods approach to quantitatively test the non-linear relationship between highway improvements and the URIG and qualitatively analyze the reasons behind the threshold effects of regional economic development levels. The main findings are as follows: first, regional economic development levels exhibit a double-threshold effect, with the impact of highway improvements shifting from widening to narrowing the URIG after surpassing the second thresholds. Second, inter-regional highways have a limited impact on narrowing the URIG, while intra-regional highways significantly reduce the URIG once crossing their thresholds, reflecting the distinct functions of different highway classes. Third, the heterogeneity analysis reveals that the impact of highway improvements on the URIG varies depending on the external environment surrounding residents, including both the indirect and direct environments. Fourth, from the perspective of rural labor transfer to non-farm employment, regional economic development levels create threshold effects in two ways: for local employment, they influence non-agricultural industry growth and job distribution following highway improvements, affecting rural laborers’ participation; for migrant employment, they impact human capital investment, influencing rural laborers’ skills and wage returns after highway improvements.