The Influence Study of Local Fiscal Expenditures on the Urban-Rural Income Gap

Jinqian DENG


Local governments form the policy distortion inclining to urbanization of public financial resource configuration under the double simulation of economic interest and political promotion, since from reform tax system. The paper adopts panel data from provinces of Chinese reform tax system from 1994-2012 and establishes variable intercept fixed effect panel data model to verify influences of local fiscal expenditures on the urban-rural income gap. The results indicate that there is co-integration relationship between local fiscal expenditures and the urban-rural income gap. There is negative effect between local fiscal expenditures and the urban-rural income gap. Therefore, it is necessary to further deepen the reform of the fiscal and taxation system and optimize structure of local fiscal expenditures.


Reform tax system; Local fiscal expenditures; Urban-rural income gap

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