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Urban-rural income polarization and economic growth in China: evidence from the analysis of a dynamic panel data model

Author

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  • F. Chen
  • X. Sun

Abstract

Using a dynamic panel data model and the system GMM, this article examines the relationship between urban-rural income polarization and economic growth at the provincial level in the period 1995 to 2010 in China. The estimated results and significant tests indicate that a certain degree of urban-rural income polarization is beneficial to economic growth at the provincial level in both stages for China as a whole, though the contribution of urban-rural income polarization to economic growth is relatively small. Aggravating urban-rural income polarization has a negative impact on economic growth in China. Based on a cluster analysis of regional economic growth at the provincial level, the authors carried out the same analysis separately for two categories of regions too. The results for those two categories of regions show that positive correlations also exist between urban-rural income polarization and economic growth in both stages, which are very similar to the analysis for the whole of China. In addition, a meaningful finding can be derived that the contribution of consumption growth rate to economic growth rate in the second stage is smaller than that in the first stage obviously.

Suggested Citation

  • F. Chen & X. Sun, 2014. "Urban-rural income polarization and economic growth in China: evidence from the analysis of a dynamic panel data model," Applied Economics, Taylor & Francis Journals, vol. 46(32), pages 4008-4023, November.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:32:p:4008-4023
    DOI: 10.1080/00036846.2014.950792
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    2. Teixeira, Aurora A.C. & Queirós, Anabela S.S., 2016. "Economic growth, human capital and structural change: A dynamic panel data analysis," Research Policy, Elsevier, vol. 45(8), pages 1636-1648.
    3. Karina Alfaro‐Moreno & José Javier Núñez‐Velázquez & Luisa Fernanda Bernat‐Diaz, 2019. "How does wage polarization affect productivity? The case of Spanish regions," Papers in Regional Science, Wiley Blackwell, vol. 98(3), pages 1317-1333, June.
    4. Li, Jintao & Li, Yixue, 2019. "Influence measurement of rapid urbanization on agricultural production factors based on provincial panel data," Socio-Economic Planning Sciences, Elsevier, vol. 67(C), pages 69-77.
    5. Tsun Se Cheong & Guanghua Wan & David Kam Hung Chui, 2022. "Unveiling the Relationship between Economic Growth and Equality for Developing Countries," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(5), pages 1-28, September.
    6. Junli Cheng & Feng Lin, 2022. "The Dynamic Effects of Urban–Rural Income Inequality on Sustainable Economic Growth under Urbanization and Monetary Policy in China," Sustainability, MDPI, vol. 14(11), pages 1-23, June.

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