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Business & Economics

THE IMPACT OF INTERNATIONAL TRADE ON THE URBAN-RURAL INCOME GAP IN CHINA: A STUDY BASED ON THE SPATIAL ECONOMETRIC MODEL³
Chuyi Fang, Hanyun Li, Yuting Wang

ABSTRACT: With the continuous development of the global economy, the income gap between urban and rural areas in developing countries has gradually expanded. Drawing on a Chinese cross-provincial panel dataset from 2008 to 2020, we construct Spatial Durbin Model to analyze the impact of international trade on the urban-rural income gap. We find that both export and import growth can significantly reduce China's urban-rural income gap and narrow the urban-rural income gap in surrounding provinces through spatial spillover effects. Besides, the development of international trade and the increasing urban-rural income gap of neighboring provinces also influence those of the province itself. Economic development, urbanization rate, national fiscal expenditure, industrial structure, labor force education level, and high-tech development all significantly influence China's urban-rural income gap.

KEYWORDS:  international trade, urban-rural income gap, spatial econometric model.

JEL classification:  J31, J53, M21

³Acknowledgments:  This work was supported by the Shanghai Sailing Program [Grant No. 20YF1413200] and the National Natural Science Foundation of China [Grant No. 72072110].