Trade liberalization and China’s urban-rural income gap: an empirical research based on China’s prefecture-level panel data

Feb. 11,2020
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In this paper, we attempted to study the impact of trade liberalization on China’s urban-rural income gap. Meanwhile, we came up with an explicit mechanism that trade liberalization affected rural labors’ non-agricultural employment. This is the practice of H-O theorem, and accords to the fact that the huge migration of rural labor to cities is happening in today’s China. Based on China’s prefecture-level panel data from 2000 to 2013, the OLS and IV approaches both find that trade liberalization significantly narrows China’s urban-rural income gap. It is because that trade liberalization promotes the non-agricultural employment of rural labor. In addition, we find the positive impacts of exports, final and intermediate imports on narrowing China’s urban-rural income gap. Hence, we think that we should stick to the policy of reform and opening-up and take a more active part in the global production network. Meanwhile, when encouraging export, we should also pay attention to import. We should ensure trade balance, and make it develop sustainably.

Corresponding Author: WANG Yuesheng
CNKI Press Officer: LI Jingjing YANG Na

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