Rural-urban income gap and agricultural growth in China: An empirical study on the provincial panel data, 1978-2010
Abstract
Purpose
This paper aims to investigate the effect of rural-urban income gap on agricultural growth in China and its dynamics over time and across regions since reform and opening up.
Design/methodology/approach
Two types of indices are constructed to measure the rural-urban income gap: the intra-provincial index and the inter-provincial index. A provincial panel data from 1978 to 2010 and growth accounting method are used to estimate the size of the adverse effect of rural-urban income gap on agricultural growth in China.
Findings
The empirical results show that both indices of rural-urban income gaps are negatively associated with agriculture output, but the inter-provincial rural-urban income gap produces a larger adverse effect than the intra-provincial rural-urban income gap. Growth accounting analysis further shows that such adverse effects are decreasing over time and are larger in the central provinces. The results represent resource diversion effects of rural-urban income gap on agriculture.
Originality/value
This paper bridges the gap in existing literature on the relationship between sectoral income gaps and agricultural growth, which confirms Schultz's argument that agricultural activities are efficient even in developing countries and the rural resources diverted out by income gap are not surplus. The results imply that equalized rural-urban and regional policies are required to maintain sustainable agricultural growth in China.
Keywords
Acknowledgements
Yanyan Gao owes very much to Professor Yew-Kwang Ng and Russell Smyth at Monash University for their helpful comments. The authors are thankful for the comments from Editor Professor Xian Xin, associate editor and three anonymous referees. However, all potential errors remain to the authors. This paper is funded by the National Social Science Foundation of China (Project No. 12CJY040), MOE (Ministry of Education in China) Project of Humanities and Social Sciences (Project No. 11YJC790047) and China Postdoctoral Science Foundation funded projects (Project No. 2011M500834 and 2012T50452).
Citation
Gao, Y., Zheng, J. and Bu, M. (2014), "Rural-urban income gap and agricultural growth in China: An empirical study on the provincial panel data, 1978-2010", China Agricultural Economic Review, Vol. 6 No. 1, pp. 92-107. https://doi.org/10.1108/CAER-02-2012-0016
Publisher
:Emerald Group Publishing Limited
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