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Urban Bias, Rural-Urban Income Gap and Agricultural Growth: the Resource-Diverting Effect of Rural-Urban Income Gap in China


  • Yanyan Gao


Urban bias has long been China’s dominant economic policy. The persistent urban bias leads to a severe rural-urban income gap and diverts physical as well as an effect of diverting the rural resource out of agricultural sector, and thus is detrimental to agricultural growth. This paper uses China’s provincial panel data from 1978 to 2007 to investigate the diverting effects of the rural-urban income gap on agricultural growth. The empirical results suggest that the persistent rural-urban income gap caused by urban bias has produced strong current, but smaller lagged resource-diverting effects on agriculture. The further study shows that the diverting effect is decreasing over time and it is larger in the middle provinces than other provinces. The time and region patterns are confirmed to be a “U shape†relationship between the rural-urban income gap and agricultural growth.

Suggested Citation

  • Yanyan Gao, 2010. "Urban Bias, Rural-Urban Income Gap and Agricultural Growth: the Resource-Diverting Effect of Rural-Urban Income Gap in China," Monash Economics Working Papers 34-10, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2010-34

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    References listed on IDEAS

    1. Vanessa Strauss-Kahn, 2004. "The Role of Globalization in the Within-Industry Shift Away from Unskilled Workers in France," NBER Chapters,in: Challenges to Globalization: Analyzing the Economics, pages 209-234 National Bureau of Economic Research, Inc.
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    More about this item


    Urban Bias; Income Gap; Agricultural Growth; China;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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