A Study on the Impact of Fiscal Expenditure Efficiency on the Urban-Rural Income Gap in the Context of Common Prosperity

JiaYi Qin

doi:10.63313/FPM.9013

Authors

JiaYi Qin School of Economics and Management, Southwest Petroleum University, Chengdu, 610500, China Author

DOI:

https://doi.org/10.63313/FPM.9013

Keywords:

Common Prosperity, Fiscal Expenditure Efficiency, Urban-Rural Income Gap

Abstract

Under the goal of common prosperity, the moderating effect of fiscal expenditure efficiency on the urban-rural income gap holds significant theoretical and practical importance. Based on provincial panel data from China for 2011–2020, this study employs a two-way fixed-effects model and mediating analysis to empirically examine the mechanism through which fiscal expenditure efficiency influences the urban-rural income gap.The findings reveal the following: First, improved fiscal expenditure efficiency significantly narrows the urban-rural income gap; urbanization serves as a key mediating pathway through which fiscal expenditure efficiency influences the income gap; in terms of regional heterogeneity, the narrowing effect is greater in central and western regions than in the eastern region; regarding expenditure structure, the moderating effect is more pronounced in regions with weaker infrastructure; and in terms of economic development levels, the effect is more pronounced in less developed regions.

References

[1] Guanglan Zhou. A Study on Measuring the Effects of Common Prosperity Based on a Three-Stage DEA Model: Empirical Findings from Zhejiang [J]. Journal of the Party School of the CPC Hangzhou Municipal Committee, 2023, (02): 44-56.

[2] Chen, A., & Du, J. (2010). Fiscal expenditure and rural-urban income gap in China. Statistical Research, 27(11), 34-39.

[3] Wang, X. D., & Wang, Y. R. (2022). Research on the Adjustment Effect of Fiscal Expenditure on Urban-Rural Income Gap: PVAR Model Test from Chinese Provincial Panel Data. East Chin. Econ. Manag, 36, 88-97.

[4] Dong, L. M., & Man, Q. L. (2017). A study on the impact of local fiscal expenditure on the urban-rural income gap. Public Finance Research, (08), 43-55. https://doi.org/10.19477/j.cnki.11-1077/f.2017.08.004.

[5] Zhang, N. (2016). The impact of public fiscal expenditure on new urbanization and residents' income gap: An empirical analysis based on VAR model. Finance and Economy, (02), 33-37. https://doi.org/10.19622/j.cnki.cn36-1005/f.2016.02.008

[6] Tang Kun. (2023). An Analysis of the Impact of the Urbanization Process on the Urban-Rural Income Gap. Sustainable Development, 13, 227.

[7] Jingran, S. U. N., & Chujun, H. U. A. N. G. (2024). The Influence Of Financial Expenditure On Charitable Public Welfare Expenditure Under The Background Of Common Prosperity: Based On Evidence From Charitable Foundations In China. Public Administration and Policy Review, 13(4), 153..

[8] Xu, D. (2024). Research on the Efficiency of Financial Expenditure in Ethnic Areas in the Process of Common Prosperity. Journal of Guangxi University for Nationalities (Philosophy and Social Sciences Edition), 46(05), 121-131.

[9] Zhou, X. Y., Li, N., & Gong, F. (2021). New urbanization, equalization of public service benefits and urban-rural income gap. Economic Review, (02), 61-82. https://doi.org/10.19361/j.er.2021.02.04

[10] Li, C. Y., Sun, T., & Wang, S. (2021). Dividend from Demographic Structure, Fiscal Expenditure Bias and Urban-Rural Income Gap in China. Economic Dynamics, (01), 105-124.

[11] Li, X. L., Si, D. K., & Zhou, F. Y. (2024). Fiscal and Financial Input and Urban-Rural Income Gap: A Perspective from Rural Revitalization Journal of Tianjin University of Finance and Economics, 44(09), 69-85. https://doi.org/10.19559/j.cnki.12-1387.2024.09.005

[12] Barro, R. J. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy, 98(5, Part 2), S103–S125.

[13] Afonso, A., Schuknecht, L., & Tanzi, V. (2010). Public sector efficiency: evidence for new EU member states and emerging markets. Applied Economics, 42(17), 2147–2164.

[14] Yan, J., Tu, X., & Zheng, J. (2023). Does the digital economy strengthen the income distribution effect of fiscal expenditure? Evidence from China. PLoS ONE, 18(8), e0290041.

[15] Samanta, S. K., & Cerf, G. (2009). Income distribution and the effectiveness of fiscal policy: Evidence from some transitional economies. Journal of Economics and Business, 12(1), 14–21.

[16] Antarabangsa, D. P. (2022). Structural transformation, income inequality, and government expenditure: Evidence from international panel data. Journal of Economics Malaysia, 56(3), 29–44.

[17] Li, X. S., & Gao, X. R. (2024). Testing the effect of local fiscal expenditure on urban-rural income gap. Statistics and Decision, 40(19), 140-145. https://doi.org/10.13546/j.cnki.tjyjc.2024.19.024

[18] WU, J. P., & ZHANG, H. Z. (2024). The Impact of Livelihood-Related Fiscal Expenditure on the Income Gap between Urban and Rural Residents under the Goal of Common Prosperity: An Analysis Based on the Fiscal Expenditure on Education and Social Security. Contemporary Finance & Economics, (1), 32..

[19] Mao, L. (2025). Fiscal vertical imbalance and income inequality: A threshold effect analysis based on government expenditure. PloS one, 20(1), e0317537.

[20] Xuan, D. E. N. G. (2011). Effects of Level and Composition of Public Spending on Urban and Rural Income Inequality: The Empirical Study from Provincial Panel Data in China. Economic Review, 4, 63-69.

[21] Liu Shuxin, Shi Chuanlin, and Fang Youwei. Fiscal Vertical Imbalance and the Urban-Rural Income Gap: Theory and Empirical Analysis [J]. Journal of Central University of Finance and Economics, 2022, (04): 3-14.

[22] Li, H., & Wu, W. Z. (2019). Allocation of financial resources, urbanization development and urban-rural income gap Journal of Commercial Economics, (09), 186-188. (in Chinese).

[23] Zhang, H., & Li, M. X. (2023).The Impact of New Urbanization Mode on the Income Gap between Urban and Rural Areas: A Heterogeneity Effect and Mechanism Analysis. Journal of Nanjing University of Finance and Economics, (01), 33-43. https://doi.org/10.20211/j.cnki.jnufe.2023.01.005

[24] Liu, J., Ma, X., Jia, W., & Zhang, S. (2022). Can new-type urbanization construction narrow the urban–rural income gap? Evidence from China. Sustainability, 14(22), 14725.

[25] Wu, X. H. (2011). Relationship among urbanization, citizenization and urban-rural income inequality: An empirical analysis based on time series data and panel data of Shandong province. Scientia geographica sinica, 1,68-76.

[26] Lian, C. (2017). The Impact of Fiscal Expenditure Structure on the Income Gap Between Urban and Rural Areas in China. Reform and Strategy, 33(05), 56-60. https://doi.org/10.16331/j.cnki.issn1002-736x.2017.05.017

[27] Jiang, Y. (2022). The Impact of Livelihood Fiscal Expenditure on Residents' Subjective Poverty. *Journal of Shandong University Philosophy and Social Sciences Edition, (05), 82-93. https://doi.org/10.19836/j.cnki.37-1100/c.2022.05.008

[28] Jiang, Y. (2019). Quality of Local Government and Efficiency of Fiscal Expenditure for People's Livelihood. Chinese Public Administration, (03), 133-139. https://doi.org/10.19735/j.issn.1006-0863.2019.03.19

[29] Yanli, F. A. N., & Shuhai, C. O. N. G. (2024). Financial support and sustainable income growth of the low-income groups. Economic Theory and Business Management, 44(3), 65..

[30] Mo, L., & Zhang, X. (2023). Legalization of government budget, fiscal transparency, and local fiscal efficiency: Evidences based on the implementation of the new budget law. Contemp. Financ. Econ, 39-51..

[31] Liu, X. G., Zhang, X., & Fang, W. Q. (2015). The urban-rural income distribution effect of infrastructure: Based on the perspective of labor transfer. The World Economy, 38(03), 145-170. https://doi.org/10.19985/j.cnki.cassjwe.2015.03.008

[32] Tong, B. (2022). Has environmental regulation widened or narrowed the urban-rural income gap? Based on the dual perspectives of economic efficiency and economic structure. J. Yunnan Univ. Financ. Econ, 38, 1-20..

[33] Tone, K. (2001). A slack-based measure of efficiency in data envelopment analysis. European Journal of Operational Research, 130(3), 498-509.

[34] Qiao, M. J., Zhao, L. F., Tian, Y., & Li, Y. R. (2024). Analysis of the impact of outward foreign direct investment on China‘s common prosperity: Empirical evidence from the provincial level. Statistics and Management, 39(02), 42-52. https://doi.org/10.16722/j.issn.1674-537x.2024.02.014

[35] Gao, Y., & Ji, Y. Y. (2023). Social Science of Beijing, (03), 77-87. https://doi.org/10.13262/j.bjsshkxy.bjshkx.230308