Rural‐urban income gap and agricultural growth in China An empirical study on the provincial panel data, 1978‐2010

Rural‐urban income gap and agricultural growth in China An empirical study on the provincial... 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png China Agricultural Economic Review Emerald Publishing

Rural‐urban income gap and agricultural growth in China An empirical study on the provincial panel data, 1978‐2010

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Publisher
Emerald Publishing
Copyright
Copyright © 2014 Emerald Group Publishing Limited. All rights reserved.
ISSN
1756-137X
D.O.I.
10.1108/CAER-02-2012-0016
Publisher site
See Article on Publisher Site

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.

Journal

China Agricultural Economic ReviewEmerald Publishing

Published: Jan 28, 2014

Keywords: China; Rural development; Employment; Labor use and migration; Agricultural sustainable development

References

  • The role of agriculture in development
    Gollin, D.; Parente, S.; Rogerson, R.
  • Educational attainment and the rural‐urban divide in China
    Knight, J.B.; Li, S.
  • The urban‐rural income gap and inequality in China
    Sicular, T.; Yue, X.; Gustafsson, B.
  • Is agriculture the engine of growth?
    Tiffin, R.; Irz, X.
  • Urban‐biased policies and rising income inequality in China
    Yang, D.T.

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