Rural-urban income gap and agricultural growth in China

Yanyan Gao (School of Economics and Management, Southeast University, Nanjing, China)
Jianghuai Zheng (School of Economics, Nanjing University, Nanjing, China)
Maoliang Bu (School of Business, Nanjing University, Nanjing, China)

China Agricultural Economic Review

ISSN: 1756-137X

Publication date: 28 January 2014



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.


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.


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.


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.



Gao, Y., Zheng, J. and Bu, M. (2014), "Rural-urban income gap and agricultural growth in China", China Agricultural Economic Review, Vol. 6 No. 1, pp. 92-107.

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